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HomeMy WebLinkAboutContract 41390January 14, 2010 Esperanza Cove, Ltd. 111 Soledad, Suite 1220 San Antonio, TX 78204 Attention: Michael Casias, Project Manager Reference: Esperanza Cove Senior Apartments Conditional Commitment Dear Mr. Casias: We are pleased to present for your review the following terms, conditions, and requirements based on the application of Esperanza Cove, Ltd, for a subordinate loan to partially finance the construction of multifamily senior rental houses for the Scenic Bluff Neighborhood subject to the following terms and conditions: I:Z�]:�:Z�1►►J1�:7 DEVELOPER CONTRACTOR LENDER AMOUNT Esperanza Cove, Ltd., a Texas Limited Partnership An entity to be approved by the City of Fort Worth__A NRP Contractors, LLC City of Fort Worth ("City") $850,000 in HOME Investment Partnerships Program funds for eligible project costs, as defined in 24 CFR 92.206 ("Loan") USE/PROJECT Construction of up to sixty-one (61) multi -family rental units at 2819 E. Belknap Street, 606 Blandin Street, and 2817 Plumwood Street in the Scenic Bluff neighborhood. Estimated total development investment is approximately $7,000,000 INVESTMENT AFFORDABILITY/ AFFORDABILITY PERIOD The Project is to remain affordable to households earning sixty percent (60%) or less of AMI. The Affordability Period is twenty (20) years from the date of completion of the project as defined by City. If the assisted units do not remain affordable for the entire Affordability Period, then the Loan will become immediately due and payable to the City. Housing and Economic and Development Department The City of Fort Worth * 1000 Throckmorton Street yE Font Worth, Texas 817-3924520 * Fax 81 1-392-2013 RENTAL RATES The Borrower shall be required to use the Maximum allowable rents as determined by HUD posted on www,hud,,qov/cpd/home/limits/rent/rentlimit.html INTEREST RATE 1.5% percent simple interest annually TERM 1. The term of the contract is twenty (20) years shall begin upon execution and shall continue for 20 years after the Project is completed as determined by City.; 2. The term of the Loan is three (3) years beginning on the date of execution of the Loan documents; PAYMENT/ The term of the loan shall be three (3) years. Payments shall be due REPAYMENT when the construction loan is converted to permanent financing or when the occupancy of the Project is at 80%, whichever is sooner. DRAW PERIOD Borrower will be entitled to make requests for draws, on a reimbursable basis, during the loan term. Draws will only be approved for HOME eligible costs in accordance with 24 CFR 92.206; City will disburse funds upon receipt of satisfactory documentation of expenses of eligible costs and proof that such costs were paid. Draws will occur as scheduled and defined in the contract. Borrower must submit at least one request for reimbursement for HOME eligible expenses by December 20, 2011 ELIGIBLE COSTS Eligible costs to be paid for by these funds will be stipulated in the contract and are defined under 24 CFR 92.206. AUDITS/INSPECTIONS City will conduct annual audits and inspections to ensure Affordability requirementsI Borrower will maintain records according to the recordkeeping requirements outlined below. RECAPTURE If at any time the Affordability requirement is not met, the HOME funds of $850,000 must be repaid or the City will foreclose on the Project Property COLLATERAL A valid Deed of Trust on the Project Property and all improvements will be filed by the City to secure payment and performance. LIQUIDATED There shall beaten percent (10%) payment of total Loan amount as DAMAGES liquidated damages if Affordability requirements are not maintained during the Affordability Period. CONDITIONS TO LOAN This Conditional Commitment is conditioned upon: FUNDING i. Satisfactory completion of an environmental review and receipt by the City of a release of funds from HUD under 24 CFR Part 58 and compliance with other federal regulations. The parties further acknowledge that the provision of any funds to the Project is conditional on the City's determination to proceed with, modify or cancel the Project based on the results of a subsequent environmental review. ii. City Council approval of award of HOME funds for the Project and receipt of HOME funds from HUD for the Project. iii. Approval of Borrower's Low Income Housing Tax Credit ("LIHTC") application by the Texas Department of Housing and Community Affairs ("TDHCA"). iv. HUD Approval of Site and Neighborhood Standards. Relevant information must be provided if a Neighborhood and Site Standards Study is required by HUD per 24 CFR 92.202 and 983.6(b). v. City determining that the Project is not over -subsidized with HOME funds as defined in by 24 CFR 92.250(b). i. If HOME funds are to be used for property acquisition or OTHER demolition, then construction must begin within twelve (12) REQUIREMENTS months of purchase date or the date on which structures are demolished. ii. Borrower will be liable for and will promptly pay all fees Borrower incurs, including expenses and charges incurred in connection with the negotiation and preparation of the documents governing or securing the Loan, and other expenses incurred in connection with the Project constructed with the Loan, including appraisal and Texas Commission on Environmental Quality (TCEQ) environmental fees, whether or not the Loan closes. Documentation must be acceptable in all respects to the City and its counsel. iv. All permits and approvals must be in place prior to funding of the Loan. v. All construction contracts, plans, surveys, etc. must be acceptable to the City and assigned as additional collateral. Approval is subject to a pre -construction review of plans, specifications and cost estimates. vi. Borrower must provide a tenant selection policy to ensure basic tenant rights and protections in order to comply with federal regulation 24 CFR 92.253. vii. Borrower must agree to any reasonable terms and conditions that are necessary to ensure City and Borrower remain in compliance with all applicable federal, state and City laws, regulations and ordinances regarding the Project. COMPLIANCE WITH If it is determined that the use of the funding provided by the City for the FEDERAL, STATE, stated Use/Project does not meet HOME requirements, Esperanza AND LOCAL LAWS Cove, Ltd. will reimburse the City for the Use/Project costs determined to be ineligible and/or disallowed under the HOME regulations. Esperanza Cove, Ltd. agrees that all housing projects assisted under this agreement will meet the property standards requirements in 24 CFR 92.251 which includes compliance with the current edition of the Model Energy Code (MEC), International Energy Conservation Code (IECC), lead -based paint standards in 24 CFR 92.355 (if applicable), as well as City building standards. Esperanza Cove, Ltd. must comply with displacement and relocation requirements at 24 CFR 92.504 and 92.353. Esperanza Cove, Ltd. certifies that it is not currently listed on the General Services Administration's List of Parties Excluded from Federal Procurement or Non -procurement Programs in accordance with Executive Orders 12549 and 12689 and will not enter into agreements to expend Federal Funds.witfi contractors that are currently listed. Esperanza Cove, Ltd. must comply with all prescribed procedures regarding nondiscrimination and equal opportunity, affirmative marketing, displacement and relocation, labor relations, lead -based paint and conflict of interest provisions described in 24 CFR 92 subpart H and 24 CFR 92.504. Esperanza Cove, Ltd. must comply with all applicable Federal laws, laws of the State of Texas and ordinances of the City of Fort Worth. Organizations that are directly funded under the HOME program may not engage in inherently religious activities as defined under 24 CFR 92.257 INSURANCE Esperanza Cove, Ltd. must maintain and present to the City on a semi - REQUIREMENTS annual basis, a General Liability Insurance in the amount of $500,000 each occurrence, $1,000,000 aggregate limit. Esperanza Cove, Ltd. is to maintain and present to the City on a semi- annual basis, a Business Automobile Liability Insurance as follows: $1,000,000 each accident on combined single -limit basis, or $250,000 Property Damage $ 300,000 Bodily Injury per person per occurrence $2,000,000 Aggregate Esperanza Cove, Ltd. and Contractor to maintain, and City on a semi-annual basis, Workers' Compensation follows: Statutory Limits Employers Liability $100,000 each accident/occurrence $100,000 disease/per employee $500,000 disease policy limit present to the insurance as Contractor is to maintain and present to the City, Builders Risk insurance. The Builder's Risk insurance must be acceptable to the City, and must be a valid policy at all times during the Loan. Contractor to maintain property and flood insurance (if required), in form and amount satisfactory to the City for the Project during the life of the Loan. If applicable, insurance must be evidenced by a valid binder/policy. Certificates of insurance are not acceptable. The City will be named as Mortgagee and as Additional Insured Party. The policy will also provide for 30-day prior notification to the City of cancellation. RECORDKEEPING Esperanza Cove, Ltd. must maintain records that will provide accurate, current, separate, and complete disclosure of the status of the funds received pursuant: t -.this Agreement and pursuant to any other applicable Federal and/or State regulations establishing standards for financial management. Upon receipt of reasonable written notice by the City and as often as City may deem necessary, Esperanza Cove, Ltd. will make available to the City all of its records and will permit City to conduct audits of all contracts, invoices, materials, payrolls, records of personnel, conditions or employment and all other data relating to the stated Use/Project. Esperanza Cove, Ltd. will provide quarterly financial and beneficiary reports that will contain such records, data and information as City may request pertinent to matters covered by this Agreement. Reports will be due to the Housing and Economic Development department within 45 days of the end of the quarter. Required report format/template and /or instructions to be provided by the City. Esperanza Cove, Ltd. will provide any additional information as requested by the City within 10 days of date of receipt of written request. CLOSING COSTS The Loan is to be closed at no cost to the City. Borrower shall be responsible for all costs associated with this transaction, including title insurance, attorney fees, filing fees, closing costs, etc. TITLE INSURANCE Borrower will pay the cost of a mortgagee's title insurance policy insuring the amount of the Loan. EXPIRATION To cause the commitment to remain in effect, the contract between the City and Esperanza Cove, Ltd. must be executed on or before August 311 2012. Any extension of such date must be in writing and signed by the City. PARTIES ARE PROHIBITED FROM UNDERTAKING OR COMMITTING ANY FUNDS TO PHYSICAL OR CHOICE=LIMITING ACTIONS, INCLUDING PROPERTY ACQUISITION, DEMOLITION, MOVEMENT, REHABILITATION, CONVERSION, REPAIR OR CONSTRUCTION PRIOR TO THE COMPLETION OF ENVIRONMENTAL REVIEW AND RECIEPT OF THE RELEASE OF FUNDS FROM HUD. VIOLATION OF THIS PROVISION WILL RESULT IN THE DENIAL OF FUNDS UNDER THIS CONDITIONAL COMMITMENT. A NOTICE TO PROCEED FROM THE CITY WILL BE ISSUED WHEN THE ENVIRONMENTAL CLEARANCE HAS BEEN RECEIVED. Any funds disbursed against this Conditional Commitment will be subject to the City's receipt of satisfactory documentation of the Loan and due diligence satisfaction. This Conditional Commitment is confidential and is intended solely for the use of Esperanza Cove, Ltd. No other person or parties has any rights whatsoever with respect to the above terms and conditions. These terms can be modified or other terms negotiated between the parties upon mutual agreement. The undersigned attests on behalf of Borrower to the fact that any funds committed herein were not first provided to the City by the Borrower, the Developer, any consultant, related party or any individual or entity acting on behalf of the Borrower in its application for the Loan. We hope the foregoing is responsive to Please indicate your acceptance with y copy to: your needs and that you will accept this City of Fort Worth Housing and Economic Development Department 1000 Throckmorton Fort Worth, TX 76102 Attn: Ryan Haden, Development Project Coordinator Sincerely, san Janis 5istant City Manager Approved as to form anal legality: t-ean�uzr� n �51�t� Assistant City Attorney bye Hendrix, City Date: ( 1 c) 2 1 ( / 1 4 9 . Date: % �7 The undersigned hereby accepts=the foregoing Conditional Commitment and the terms and requirements herein set for and agrees to be bound thereby. BORROWER Esperanza Cove, Ltd. A Texas limited partnership By: NRP Group, LLC A Texas Limited Partnership Date: Ddbra Guerre'"ro, Authorized Representative NRP Group, LLC x C3 i { M M&C Review Page 1 of 2 Official site of the City of Fort Woith, Texas FORT VORTII COUNCIL ACTION: Approved on 1/25/2011 DATE: 1/25/2011 REFERENCE NO.: C-24713 LOG NAME: ESPE ESPERANZA CODE: C TYPE: NON -CONSENT PUBLIC NO HEARING. SUBJECT: Authorize a Change in Use and Expenditure of $850,000.00 of HOME Investment Partnerships Program Grant Funds to Esperanza Cove, Ltd., in the Form of a Subordinate Interim Loan for the Development of Esperanza Cove Senior Apartments, Multifamily Senior Housing Located at 2819 East Belknap Street, Authorize the Execution of a Conditional Commitment and Contract and Authorize a Substantial Amendment to the City's 2010-2011 Action Plan (COUNCIL DISTRICT 2) RECOMMENDATION: It is recommended that the City Council: 1. Authorize a substantial amendment to the City's 2010-2011 Action Plan; 2. Authorize the City Manager, or his designee, to substitute funding years in order to meet commitment disbursement and expenditure deadlines for grant funds from the United States Department of Housing and Urban Development; 3. Authorize a change in use and expenditure of $850,000.00 in HOME Investment Partnerships Program Grant funds to Esperanza Cove, Ltd., in the form of a subordinate interim loan for the development of the Esperanza Cove Senior Apartments, multifamily senior housing located at 2819 East Belknap Street; 4. Authorize the City Manager, or his designee, to execute a conditional commitment with Esperanza Cove, Ltd., for a three year subordinate interim loan that conditions funding, among other things, on satisfactory completion of HOME requirements; 5. Authorize the City Manager, or his designee, to execute a contract with Esperanza Cove, Ltd., for the project for a term beginning on the date of execution of the contract and ending on the date the 20 year affordability period expires; 6. Authorize the City Manager, or his designee, to extend or renew the conditional commitment or the contract if Esperanza Cove, Ltd., requests a written extension and such extension is necessary for completion of the project; and 7. Authorize the City Manager, or his designee, to amend the conditional commitment or the contract if necessary to achieve project goals provided that the amendment is within scope of the project and in compliance with City policies and applicable laws and regulations governing the use of federal grant funds. DISCUSSION: On October 14, 2010, the City issued a Request for Proposals (RFP) for developers to award and expend up to $2,260,000.00 of HOME Investment Partnerships Program Grant funds (HOME). On November 18, 2010, NRP Holdings, LLC, (NRP) submitted a response requesting $850,000.00 of the available HOME funds for the development of the Esperanza Cove Senior Apartments, a multifamily senior rental project to be located at 2819 East Belknap Street. City staff reviewed all RFP submissions and recommends the award of $850,000.00 in HOME funds, in the form of a subordinate interim loan, to Esperanza Cove Ltd., a Texas limited partnership that will be formed to develop, own http://apps.cfwnet.org/council.packet/mc review.asp?ID=14725&councildate=l/25/2011 9/4/2013 M&C Review Page 2 of 2 and manage the project. The development site will be three lots now located at 606 Blandin, 2819 E. Belknap and 2817 Plumwood in the Six Points Urban Village. The project consists of 61 units in a three story building with elevators. There will be one and two bedroom units ranging from 750 to 900 square feet in size. As part of the financing for the project, Esperanza Cove, Ltd., has applied for nine percent competitive Low Income Housing Tax Credits (LIHTC) from the Texas Department of Housing and Community Affairs (TDHCA). NRP also entered into negotiations with the Fort Worth Housing Finance Corporation (FWHFC) for its participation in the project. On January 4, 2011, the Board of the FWHFC approved a resolution to enter an agreement with NRP to develop the project and authorized the formation of Esperanza Cove GP, LLC, to act as general partner for Esperanza Cove, Ltd. The FWHFC will purchase the development site and lease it to Esperanza Cove, Ltd., under a long term ground lease. Total project costs are approximately $8,838,698,00. The award of the HOME funds is contingent upon the award of the LIHTC. Staff recommends the following loan terms: i. Designate HOME -assisted units according to HOME regulations with a 20 year affordability period; ii. HOME funds secured by a recorded Deed of Trust on the real property; iii. 1.5 percent simple interest with principal and accrued interest due at the end of loan term; and iv. Loan term is three years or conversion to permanent financing. The commitment of HOME funds is conditioned upon the following; i. Award of LIHTC; ii. Satisfactory completion of environmental review per 24 CFR Part 58; and iii. Authorization to use grant funds from HUD. City staff recommends the change in use and expenditure of up to $850,000.00 in HOME funds for the project, which is to benefit low and very low income citizens by providing affordable housing. A public comment period on the change in use of these HOME funds was held from December 16, 2010 to January 20, 2011. Any comments are maintained by the Housing and Economic Development Department in accordance with federal regulations. This project is located in COUNCIL DISTRICT 2. FISCAL INFORMATION/CERTIFICATION: The Financial Management Services Director certifies that funds are available in the current operating budget, as appropriated, of the Grants Fund. TO Fund/Account/Centers GR76 539120 017206461XXX $850,000.00 Submitted for City Manager's Office b� Originating Department Head: Additional Information Contact: ATTACHMENTS FROM Fund/Account/Centers GR76 539120 017206461070 Susan Alanis (8180) Jay Chapa (5804) Cynthia Garcia (8187) Ryan Haden (7329) http://apps.cfwnet.org/council�acket/mc review.asp?ID=14725&councildate=l/25/2011 9/4/2013