HomeMy WebLinkAboutContract 41393 (2)January 14, 2011
M.R. Development Corporation
100 N. Mitchell Rd.
Mansfield, Texas 76063
Attention: Kim McCaslin-Schlieker,
Vice -President
Reference: Bonnie Brae Estates Conditional Commitment
Dear Ms. McCaslin-Schlieker:
We are pleased to present for your review the following terms, conditions, and requirements based on the
proposal of M.R. Development Corporation or its designated affiliate for an interim, subordinate, construction
loan to partially finance the construction of the Bonnie Brae Estates Development, subject to the following
terms and conditions:
BORROWER Bonnie Brae, LP, to be formed, ("Borrower").
DEVELOPER Bonnie Brae Development, LLC (to be formed)
CONTRACTOR Twin Cities Equipment Co., Inc.
LENDER City of Fort Worth ("City")
AMOUNT $1,100,000.00 HOME (the "Loan")
USE/PROJECT New construction of Bonnie Brae Estates a single family rental subdivision. The site
is located at 3715 NE 28th Street and 3650 Kimbo Road. ("Development")
INVESTMENT
Estimated investment is approximately $10,877,495.
AFFORDABILITY/ The Development is to remain affordable to households earning 60% or less of Area
AFFORDABILITY Median Family Income (AMI) as defined by the United States Department of
PERIOD Housing and Urban Development for a minimum of twenty (20) years from the date
units have been entered into the HUD IDIS reporting system. If the HOME
assisted units do not remain affordable for the specified period, then the required
HOME funds will be immediately due and payable to the City or the property will be
Housing and Economic and Development Department --
The City of Fort Worth � 1000 Throckmorton Street � Fort Worth, Texas 7610 0������� �����® CITY SECRETARY
817-392-7520 *Fax 817-392-2013
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foreclosed.
RENTAL RATES The Borrower shall be required to use the Maximum allowable rents as determined
by HUD posted www.hud.gov/cpd/home/limits/rent/rentlimit.html .
INTEREST RATE Interest will accrue at a rate of one point five percent (1.5%) simple interest
annually.
TERM 1. Term of contract is for twenty (20) years and shall begin upon execution and
shall continue for twenty (20) years After Development completion as
determined by the City.
2. The term of the Loan is for 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 when the
REPAYMENT 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 to ensure Affordability requirements. 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
$1,100,000 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.
LIQUDATED There shall beaten percent (1001.) payment of total Loan amount as liquidated
DAMAGES damages if Affordability requirements are not maintained during the Affordability
Period.
CONDITIONS TO Satisfactory completion of an environmental review and receipt by the City of a
LOAN FUNDING 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.
City Council approval of award of HOME funds for the Project and receipt of
HOME funds from HUD for the Project.
ii. 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).
iii. City determining that the Project is not over -subsidized with HOME funds as
defined in by 24 CFR 92.250(b).
OTHER i. If HOME funds are to be used for property acquisition or demolition, then
REQUIREMENTS construction must begin within twelve (12) 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,
A
ncluding 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, in addition to
the principal and interest on the Loan.
iii. Documentation must be acceptable in all respects to the City and its counsel.
iv. Zoning 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 to City and Borrower remain in compliance with all
applicable federal, state and City laws, regulations and ordinances regarding
the Development.
COMPLIANCE WITH If it is determined that the use of the funding provided by the City does not meet
FEDERAL. STATE, HUD HOME requirements, Borrower will reimburse the City for the costs determined
AND LOCAL LAWS to be ineligible and/or disallowed under the HOME regulations under 24 CFR
92.206.
Borrower agrees that the Projects assisted 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, as well as City building standards.
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Borrower must comply with Section 504 of Rehabilitation Act of 1973. Section 504
requires 5% of the units, or at least one unit, whichever is greater, to be accessible
for persons with mobility disabilities. An additional 2% of the units must be
accessible for persons with hearing or visual disabilities.
Borrower must comply with displacement and relocation requirements at 24 CFR
92.353 and 24 CFR 42.
Borrower 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 with contractors that are
currently listed.
If applicable, Borrower will comply with federal labor standards under 24 CFR
92.354, Davis Bacon prevailing wage rates, and submit required documentation to
ensure compliance.
Borrower must comply with all prescribed procedures regarding nondiscrimination
and equal opportunity, affirmative marketing, displacement and relocation, labor
relations, lead -based paint, property standards, and conflict of interest provisions
described in 24 CFR 92 Subpart H and 24 CFR 92.5040
Organizations that are directly funded under the HOME program may not engage in
inherently religious activities as defined under 24 GFR 92.257
Borrower must comply with all applicable Federal laws, laws of the State of Texas
and ordinances of the City of Fort Worth.
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.
INSURANCE Borrower must maintain and present to the City on asemi-annual basis, a General
REQUIREMENTS Liability Insurance in the amount of $500,000 each occurrence, $1,000,000
aggregate limit.
Borrower is to maintain and present to the City on asemi-annual basis, a Business
Automobile Liability Insurance as follows:
$1,000,000 each accident on combined single -limit basis, or
$250,000 Property Damage
$500,000 Bodily Injury per person per occurrence
$2,000,000 Aggregate
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Borrower and Contractor to maintain, and present
basis, Workers' Compensation insurance as follows:
Statutory Limits
Employers Liability
$100,000 each accident/occurrence
$100,000 disease/per employee
$500,000 disease policy limit
to the City on a semi-annual
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 Borrower must maintain records that will provide accurate, current, separate, and
complete disclosure of the status of the funds received pursuant to this Agreement
and pursuant to any other applicable Federal and/or State regulations establishing
standards for financial management.
At any reasonable time and as often as City may deem necessary, Borrower will
make available to the City all of its records and will permit City to conduct audits of
aIt contracts, invoices, materials, payrolls, records of personnel, conditions or
employment and all other data relating to the program.
Borrower 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. Borrower will provide any
additional information as requested by the City within ten (10) days of date 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 the mortgagee's title insurance policy insuring the
amount of the Loan.
LATE CHARGES Payments received fifteen (15) days after the payment due date will incur a late
payment charge equal to 5% of the amount then due.
ACCEPTANCE In order for this Conditional Commitment to remain effective, an original of this
Commitment letter must be executed by Borrower and any Guarantors and returned
to the City on or before January 26, 2011. Any extension of such time for
acceptance must be in writing and signed by a City representative.
EXIPIRATION To cause this commitment to remain in effect, the Contract between M.R.
Development and the City must be executed on or before January 31, 2012. Any
extension of such date must be in writing and signed by the City.
This Commitment is confidential and is intended solely for the use of M.R. Development Corporation. 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 written agreement.
BORROWER 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
The undersigned hereby accepts the foregoing Commitment and the terms and requirements herein set for
and agrees to be bound thereby and attests to the following:
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.
Sincerely,
Susan
Manager
Approved a � o form and le
Vicki Ganske
Senior Assistant City Attorney
BORROWER
Bonnie Brae, LP
Signed:
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Kirrl. McCaslin-Schlieker
Vice President
M.R. Development Corporation
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City of Fort Worth, Texas
Mayor and Council Communication
COUNCIL ACTION: Approved on 1/25/2011
DATE: Tuesday, January 25, 2011
LOG NAME: 17BONNIE BRAE ESTATES
REFERENCE NO.: C-24709
SUBJECT:
Authorize an Expenditure of $11100,000.00 of HOME Investment Partnerships Program Grant Funds to
Bonnie Brae, L.P., in the Form of a Subordinate Interim Loan for the Development of the Bonnie Brae
Estates, a Single Family Rental Subdivision Located at 3715 NE 28th Street and 3650 Kimbo
Road, Authorize the Execution of a Conditional Commitment and Contract, and Authorize a Substantial
Amendment to the City's 2007-2008 and 2008-2009 Action Plans (COUNCIL DISTRICT 4)
RECOMMENDATION:
It is recommended that the City Council:
1. Authorize a substantial amendment to the City's 2007-2008 and 2008-2009 Action Plans;
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 the expenditure of $1,100,000.00 of HOME Investment Partnerships
Program Grant funds to Bonnie Brae, L.P., an affiliate of M.R. Development Corporation, in the form of a
subordinate interim loan for the development of the Bonnie Brae Estates, a single familiy rental
subdivision located at 3715 NE 28th Street and 3650 Kimbo Road;
4. Authorize the City Manager, or his designee, to execute a conditional commitment with Bonnie Brae,
L.P., for athree-year subordinate interim loan that conditions loan funding, among other things, on
satisfactory completion of HOME requirements;
5. Authorize the City Manager, or his designee, to execute a contract with Bonnie Brae, L.P., 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 for up to one year if Bonnie Brae, L.P., requests an 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 the 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). The HOME funds
available under the RFP were originally allocated to other projects that were not completed either because
A lack of private funding, environmental issues or market condition. On November 18, 2010, M.R.
Development Corporation (Developer) submitted a response requesting $1,100,000.00 of the available
HOME funds for construction costs for the development of the Bonnie Brae Estates, a single family rental
subdivision to be located at 3715 NE 28th Street and 3650 Kimbo Road. City staff reviewed all RFP
submissions and recommends the award of $1,100,000.00 in HOME funds, in the form of a subordinate
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interim loan to Bonnie Brae, L.P., a Texas limited partnership that will be formed by Developer.
Currently,, ,the development site is vacant and will be subdivided into individual lots and include new
streets. The project will consist of 68 two, three and four bedroom single family rental houses ranging in
size from 1,100 to 1,350 square feet. The houses will be available for rent to households earning 30
percent, 50 percent and 60 percent of the Area Median Income (AMI) as determined by the United States
Department of Housing and Urban Development (HUD). The subdivision will include amenities such as a
business center, community room, and an outdoor playground area plus picnic tables and grills. The
property will also feature a leasing office, mailroom and laundry facilities.
As part of the financing of the project, Bonnie Brae, L.P., or the Developer will submit an application for
nine percent competitive Low Income Housing Tax Credits (LIHTC) to the Texas Department of Housing
and Community Affairs (TDHCA) on March 1, 2011. Total project costs including the $1,100,000.00
HOME award equal nearly $12,000,000.00.
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 end of loan term; and
iv. Loan term is three years or at conversion to permanent financing.
The commitment of HOME funds is conditioned upon the following:
i. Satisfactory completion of the environmental review per 24 CFR Part 58; and
ii. Authorization to use grant funds from HUD.
City staff recommends the change in use and expenditure of $1,100,000.00 in HOME funds for the
project, which is to benefit low and very low income citizens by providing them with 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 4.
FISCAL INFORMATION /CERTIFICATION:
The Financial Management Services Director certifies that funds are available in the current operating
budget, as appropriated, of the Grants Fund.
FUND CENTERS:
TO Fund/Account/Centers FROM Fund/Account/Centers
GR76 539120 005206181XXX $767.950.53 GR76 539120 005206181360 $767.950.53
GR76 539120 005206271XXX $332.049.47 GR76 539120 005206271080 $332.049.47
CERTIFICATIONS:
Submitted for Citv Manager's Office by: Susan Alanis (8180)
Originating Department Head: Jay Chapa (5804)
Cynthia Garcia (8187)
Additional Information Contact: Avis F. Chaisson (6342)
ATTACHMENTS
1. Available Funds- Bonnie Brae.pdf (CFW Internal)
http://apps.cfwnet.org/ecouncil/printmc.asp?id=14672&print=true&DocType=Print O1/26/2011