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HomeMy WebLinkAboutContract 43266 (2)LENDER BORROWER DEVELOPER CONTRACTOR GUARANTORS AMOUNT USE/DEVELOPMENT HOME UNITS SECTION 504 UNITS INVESTMENT / OTHER SOURCES TERM INTEREST RATE AFFORDABILITY/ AFFORDABILITY PERIOD FORT WORTH Ther Harm ra V0H0 s C«mU o merfAt City of Fort Worth ("City") Harmon Villas Investments, LP, Sphinx Development Corporation, LLC N/A N/A $300,000.00 of HOME Investment Partnerships Program Grant funds for eligible development hard costs as defined in 24 CFR 92 206 (the "Loan"). The Loan is to be used for construction costs related to the development of Harmon Villas (the "Development"), a 150 unit multifamily complex to be located at 9592 Harmon Road. The Development will have HOME -assisted units designated according to HOME regulations for the duration of the Affordability Period as defined below. All units will be available for rent to households earning sixty percent (60%) or Tess of Area Median Income (AMI) as determined by United States Department of Housing and Urban Development (HUD) The number of HOME - assisted units to be determined by the City at its sole discretion. In accordance with Section 504 of the Rehabilitation Act of 1973, the greater of 5% or 8 of the units will be accessible for persons with mobile disabilities and the greater of 2% or 3of the units must be accessible for persons with hearing or visual disabilities. Estimated total is $19,801,920.00. Borrower will enter into a contract with City setting forth the terms of the Loan and the requirements related to completion of the Development ("Contract"). The term of Contract is for 3 years from the date of the loan documents. The term of the Loan is 3 years beginning on the date of execution of the Loan documents. The terms of the Contract and the Loan may be extended for up to one (1) year upon Borrower's written request at City's option. The lesser of 1 % or the Applicable Federal Rate (AFR) per annum. The HOME units are to be rented to households earning eighty percent (80%) or less of AMI as determined by HUD. Area median income is posted on: htto://www. hud.aov/offices/cad/affordablehousina/aroarams/home/limits/income/2012/index.cfm At initial lease -up, the High HOME units must be rented to households earning sixty percent (60%) or less of AMI. If the HOME assisted units do not remain affordable for the entire Affordability Period, then the entire Loan amount will be immediately due and payable to the Housing and Economic Develonment Denartment The City of Fort Worth * 1000 Throckmorton Street * Fort Worth, Texas 76102 817-392-7520 * Fax 817-392-2013 C�_�- 0-"12 PAYMENT/ REPAYMENT CONDITIONS TO LOAN FUNDING OTHER REQUIREMENTS City. In addition, Borrower will be liable for liquidated damages (described below). The Affordability Period is 20 years. Principal and all accrued but unpaid interest will be due and payable no later than 3 years from date of the Loan documents PARTIES ARE PROHIBITED FROM UNDERTAKING OR COMMITTING ANY FUNDS TO P HYSICAL OR CHOICE -LIMITING ACTIONS, INCLUDING PROPERTY ACQUISITION, DEMOLITION, REHABILITATION, CONVERSION, REPAIR OR CONSTRUCTION P RIOR TO THE COMPLETION OF ENVIRONMENTAL REVIEW AND RECEIPT OF THE RELEASE OF FUNDS FROM HUD VIOLATION OF THIS PROVISION WILL RESULT IN THE DENIAL OF FUNDS AND TERMINATION OF THIS CONDITIONAL COMMITMENT A NOTICE TO PROCEED FROM THE CITY WILL BE ISSUED WHEN THE ENVIRONMENTAL CLEARANCE HAS BEEN RECEIVED. H. Compliance with the Uniform Relocation and Assistance and Real Property Acquisition Policies Act of 1970 as amended (42 U.S.C. 4201-4655) and the implementing regulations at 49 CFR Part 24, Section 104(d) of the Housing and Community Project Act of 1974 as amended, and 24 CFR Part 92.353. iii. Compliance with the Lead -Based Paint Poisonings Protection Act (42 U.S.C. Section 4831(b)) and the Residential Lead Based Paint Hazard Reduction Act of 1992 (42 U.S.C. S ection 4851-4856) and implementing regulations at 24 CFR Part 35. iv. Borrower's receipt of award of Low Income Housing Tax Credits ('LIHTC" or "Tax Credits") from the Texas Department of Housing and Community Affairs ("TDHCA") v. Borrower's receipt of firm commitment of construction and permanent financing, and commitment from equity investor to purchase the Tax Credits. vi. The closing of tax credit equity for the Development and the construction loan. vii. A Subsidy Layering Analysis showing that the Development has a gap in funding and is not over -subsidized with HOME funds as defined by 24 CFR 92.250(b). viii. If applicable, 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). i. If HOME funds are to be used for property acquisition or demolition, then construction must begin within twelve (12) months of purchase date or the date on which structures are demolished. ii. Construction work on the Development must begin within 6 months of the date of contract execution or the Contract will terminate. Hi. Any Loan documentation and reimbursement requests must be submitted in a form acceptable in all respects to the City and its counsel. iv. 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 Development constructed with the Loan, including appraisal and Texas Commission on Environmental Quality (TCEQ) environmental fees whether or not the 2 DRAW PERIOD ELIGIBLE COSTS COLLATERAL LIEN POSITION RECAPTURE LI 0 UIDATED DAMAGES RENTAL RATES TITLE INSURANCE Loan closes, in addition to the principal and interest on the Loan. v. All permits and approvals must be in place prior to funding of the Loan. vi. Zoning approvals must be in place prior to funding of the Loan. vii. 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. viii. Borrower must agree to any 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 Development. ix. The Loan is to be closed at no cost to the City. Borrower shall be responsible for all costs associated with this transaction, including mortgagee's title insurance policy, attorney's fees, filing fees, closing costs, etc. x. Any financing subordinate to the Loan must be approved by City. Borrower will be entitled to make requests for draws, on a reimbursable basis, during the Loan term. Draws will only be approved for identifiable hard construction costs in accordance with 24 CFR 92.206 Draws will occur as scheduled and as defined in the Contract. City will disburse funds upon receipt of satisfactory documentation of eligible costs and proof that such costs were paid. Eligible costs to be paid for by these funds will be stipulated in the Contract and are defined under 24 CFR 92.206. A second lien Deed of Trust on Development real property and all improvements will be recorded by the City prior to the first draw to secure payment and performance. Repayment of the Loan shall not release the Deed of Trust which shall continue in effect throughout the Affordability Period to secure the Affordability of the Development. Subordinate only to Borrower's construction loan and permanent financing. If at any time the Affordability requirements are not met, the City will either foreclose its Deed of Trust or the entire Loan amount and liquidated damages (described below) must be repaid. There shall be a 10% payment of original total Loan amount as liquidated damages for every year that the Affordability requirements are not maintained during the Affordability Period. The Borrower must use the Maximum allowable HOME rents as determined by HUD• Maximum allowable HOME rents are posted on www.hud.aovicod/homeilimits/rent/rentlimit.html • The following applies when combining LIHTC with HOME funds: HOME -assisted High HOME Rent unit _ High HOME Rent HOME -assisted Low HOME Rent unit Low HOME Rent LIHTC-assisted unit -- Tax Credit rent limit © HOME- and LIHTC-assisted unit -- Lesser of (i) HOME rent limit that applies (either High HOME rent or Low HOME rent) or (ii) Tax Credit rent limit Borrower will pay the cost of a mortgagee's title insurance policy insuring the amount of the Loan. 3 AUDITS City will conduct annual audits during the 20 year Affordability Period to ensure Affordability requirements are being met. Reimbursement requests for HOME eligible expenses will also be subject to audits Borrower will maintain records in accordance with the recordkeeping requirements outlined below. COMPLIANCE WITH If it is determined that the use of the funding provided by the City for the stated FEDERAL. STATE. Use/Development does not meet HOME requirements, Borrower will reimburse the City for the AND LOCAL LAWS costs determined to be ineligible and/or disallowed under the HOME regulations. Borrower agrees that the Development 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. 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 must 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 o pportunity, affirmative marketing, and conflict of interest provisions described in 24 CFR 92 Subpart H and 24 CFR 92.504. Organizations that are directly funded under the HOME program may not engage in inherently religious activities as defined under 24 CFR 92.257. Borrower must comply with all applicable Federal laws, laws of the State of Texas and o rdinances of the City of Fort Worth. Borrower must provide a tenant selection policy to ensure basic tenant rights and protections in o rder to comply with 24 CFR 92.253. INSURANCE Borrower must maintain and present to the City on a semi-annual basis, a General Liability REQUIREMENTS Insurance policy in the amount of $500 000 each occurrence, $1,000,000 aggregate limit. Borrower is to maintain and present to the City on a semi-annual basis, 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 Borrower and Contractor to maintain, and present to the City on a semi-annual 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 Contractor is to maintain and present to the City Builders Risk insurance. The Builders Risk policy must be acceptable to the City, and must be a valid policy at all times during the Loan. 4 RECORDKEEPING INDEMNIFICATION BREACH OF CONDITIONS ACCEPTANCE EXPIRATION Contractor to maintain property and flood insurance (if required), in form and amount satisfactory to the City for the Development during the Loan term 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. Borrower must maintain records that will provide accurate, current, separate, and complete disclosure of the status of the funds received pursuant to this Commitment and the Contract and pursuant to any other applicable Federal and/or State regulations establishing applicable 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 all contracts, invoices, materials, payrolls, records of personnel, conditions or employment and all other data relating to the stated Use/Development. 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 Commitment and the Contract such as tenant leases and income eligibility certification. 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 will be provided to Borrower by City. Borrower will provide any additional information as requested by the City within 10 days of date of receipt of written request. Borrower agrees to indemnify and to defend and hold City harmless against (a) any brokerage commissions or finder's fees claimed by any broker or other party in connection with the transactions contemplated herein; or (b) any claims related to losses, costs, damages or expense that City may incur, directly or indirectly, including reasonable attorney's fees, as a result of or in connection with the presence or removal of any environmental contamination or hazardous materials at, on or under the Development or any adjacent of proximate property, and the violation of any applicable federal and state environmental laws or in connection with the Development. This indemnity shall survive cancellation, termination, or avoidance of this Commitment. City hereby reserves for itself, its successors and assigns, the right to pursue all remedies, either at law or in equity, to enforce the conditions of this Commitment including but not limited to seeking specific performance of Borrower's obligation to the Development. City may also prior to Loan closing, and in its sole and absolute discretion declare this Commitment null and void upon an event of default or breach by Borrower of any of its representations contained in its application for the Loan or in this Commitment, or any violation of the HOME regulations, in which event neither City not Borrower shall have any further rights or obligations under this Commitment, except for such obligations of Borrower that are expressly stated to survive termination hereof. In order for this Commitment to remain effective, an original must be executed by Borrower and any Guarantors and returned to the City on or before May 18, 2012. Any extension of such time for acceptance must be in writing and signed by a City representative. To cause this Commitment to remain in effect, the Contract between Borrower and the City must be executed on or before July 30, 2013 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 Harmon Villas Investments, LP No other person or party has any rights whatsoever with respect to the above terms and conditions. These terms can be modified or other terms negotiated between the parties only upon mutual written agreement. 5 The City attests that 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 If the foregoing is responsive to your needs, please indicate your acceptance with your signature below and by returning a signed copy to: City of Fort Worth Housing and Economic Development Department 1000 Throckmorton Fort Worth, TX 76102 Attn: Avis Chaisson, Community Development Coordinator 6 Sincerely, >itnati4 Fernando Costa, Assistant City Manager Approved as to form and legality: Vicki S. Attest: Date: S~�iZer/AiZ {24 01-1M11 Ganske, Senior Assistant City Attorne t�EO,?? A, Qo0000o0 t‹) M L r• City SecretaryY M&C C-25488 '000 4%0 ri 210 UO pi 0,4( 4 4b$XAS THE UNDERSIGNED ON BEHALF OF BORROWER HEREBY ACCEPTS THE FOREGOING COMMITMENT AND THE TERMS AND REQUIREMENTS HEREIN SET FORTH AND AGRFES TO BE BOUND THEREBY. r-�RA/ Ed as 8 UO d g Cr) Nit 0 Ober % Date: 3/20/2012 vi %Oa BORROWER: Harmon Villas Investments, LP, By: Sphinx Dcvclopmcnt Corporation Harmon Villas Development, LLC oG4. n 0-4 ct9s Date: OFFICIAL RECORD' CITY SECRETARY PT. WORTH, TX 7 Official site of the City of Furt \With, Texas T COUNCIL ACTION: Approved on 3/20/2012 - Resolution No. 4068-03-2012 DATE: 3/20/2012 REFERENCE NO.: **C-25488 LOG NAME* 17HARMONVILLAS CODE: C TYPE: CONSENT PUBLIC NO HEARING: SUBJECT: Authorize Change of Use and Expenditure of $300,000.00 of HOME Investment Partnerships Program Grant Funds to Sphinx Development Corporation or its Designated Affiliate, in the Form of an Interim Loan for Harmon Villas, a Multifamily Housing Development to Be Located at 9592 Harmon Road, Authorize Execution of a Conditional Commitment and Contract, Authorize Substantial Amendment to the City of Fort Worth's 2009-2010 and 2010-2011 Action Plans and Substitution of Funding Years and Adopt Resolution Supporting the 2012 Low Income Housing Tax Credit Application for the Development (COUNCIL DISTRICT 2) RECOMMENDATION: It is recommended that the City Council: 1. Authorize a substantial Amendment to the City of Fort Worth's 2009-2010 and 2010-2011 Action Plans; 2. Authorize substitution of current and prior 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 Change in Use and expenditure of $300,000 00 in prior years HOME Investment Partnerships Program Grant funds to the Sphinx Development Corporation or its designated affiliate in the form of a interim repayment loan for the development of Harmon Villas; 4. Authorize the City Manager or his designee to execute a Conditional Commitment with the Sphinx Development Corporation or its designated affiliate for a interim repayment loan that conditions funding on the completion of the Environmental Review satisfactory completion of HOME requirements and among other things, receipt of Low Income Housing Tax Credits from the Texas Department of Housing and Community Affairs; 5. Authorize the City Manager or his designee to execute a HOME contract with Sphinx Development Corporation or its designated affiliate, for the Development for a term beginning on the date of execution of the contract and ending on the date the 20 year affordbility 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 Sphinx Development Corporation requests an extension and such extension is necessary for completion of the Development; 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 Development and in compliance with City policies and applicable laws and regulations governing the use of federal grant funds; and 8. Adopt the attached Resolution supporting the 2012 Low Income Housing Tax Credit application. DISCUSSION: The Housing and Economic Development Department issued a Request For Proposals (RFP) in January to award HOME Investment Partnerships Program (HOME) Grant funds to developers applying to the Texas Department of Housing and Community Development Affairs (TDHCA) for Low Income Housing Tax Credits (LIHTC). On January 20, 2012, the Sphinx Development Corporation (SDC) submitted a response requesting $300,000 00 of the available HOME funds for construction costs related to the development of the Harmon Villas (Development), a 150 unit multifamily complex to be located at 9592 Harmon Road. Staff reviewed all RFP submissions and recommends the award to SDC or an affiliate of $300,000.00 in HOME funds in the form of a subordinate interim loan for eligible costs for the Development. The Development will consist of one, two and three -bedroom units. All of the units will be available for rent to households earning 60 percent or less of Area Median Income (AMI) as determined by the U nited States Department of Housing and Urban Development (HUD). SDC will hire a Social S ervices Coordinator to coordinate various services and activities for tenants. The complex will include amenities such as a controlled access gates, furnished clubhouse, fitness room, activity room, water features and a gazebo. S DC has submitted an application for LIHTC to the TDHCA as part of the financing for the Development Total Development cost is approximately $19,801,920.00. Staff recommends the following HOME loan terms: i. Designate HOME -assisted units according to HOME regulations with a 20 Year Affordability P eriod; ii. Secure payment and performance of the HOME requirements by a Deed of Trust on the real property for the length of the Affordability Period; iii. One percent interest rate; and iv. Repayment of principal and accrued interest is due three years from the date of the loan documents. The commitment of HOME funds is conditioned upon the following: i. Receipt of funds from HUD; ii. Satisfactory completion of the environmental review per 24 CFR Part 58; Hi. Authorization to use grant funds from HUD; and iv. Award of LIHTC by the TDHCA. Staff recommends the change in use and expenditure of $300,000.00 of HOME funds for the Development. HOME funds may be used for any eligible cost related to this Development. The Action Plan funding years selected may vary and be substituted based on the Principle of First In, First Out, in order to expend oldest grant funds first. The Development will benefit low and very low income citizens by providing them with quality, accessible, affordable housing. A public comment period on the intent to use HOME funds was held from February 15, 2012 to March 15, 2012. Any comments are maintained by the Housing and Economic Development Department in accordance with federal regulations. This development 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 FROM Fund/Account/Centers GR76 539120 017206461180 $300,000.00 GR76 539120 017206461990 $300.000.00 Submitted for Citv Manager's Office bv: Originating Department Head: Additional Information Contact: Fernando Costa (6122) Jay Chapa (5804) Cynthia Garcia (8187) Avis F. Chaisson (6342) ATTACHMENTS HarmonVillasCouncilMap.pdf LIHTC Harmon Villas Resolution 3-20-1 (2).doc