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HomeMy WebLinkAbout065302-DR1 - General - Contract - FW Hughes House II, LPCITY SECRETARY CONTRACT NO. 65302-DR1 DEED RESTRICTIONS HOME Funds THESE DEED RESTRICTIONS ("Deed Restrictions") are made effective as of July 1, 2026, by and between FW HUGHES HOUSE II, LP, a Texas limited partnership ("Owner"), as Grantor, and CITY OF FORT WORTH, TEXAS, a home rule municipality in the State of Texas ("City"), as Grantee. WITNESETH: WHEREAS, City has received a grant from the United States Department of Housing and Urban Development ("HUD") through the HOME Investment Partnerships Program, Catalog of Federal Domestic Assistance No. 14.239 ("HOME"), with which City desires to promote activities that expand the supply of affordable housing and the development of partnerships among City, local governments, local lenders, private industry and nonprofit housing organizations; WHEREAS, the primary purpose of the HOME program pursuant to the HOME Investment Partnerships Act at Title II of the Cranston Gonzales National Affordable Housing Act of 1990, as amended, 42 U.S.C. 12701 et seq.(the "Act") and the HOME Investment Partnerships Program Final Rule, as amended, 24 CFR Part 92 et seq. ("HOME Regulations"), is to benefit low- and moderate -income individuals and families by providing them with affordable housing; WHEREAS, Owner proposes to use HOME funds for a project whereby Owner will construct, develop, own, and operate a new 302-unit affordable housing development in the City to be known as Hughes House 11 Apartments (the "Project"); WHEREAS, City has agreed to lend Owner $1,000,000.00 in HOME funds (the "Loan"), pursuant to the requirements of the HOME program and in accordance with all obligations assigned to it from that certain HOME Contract, City Contract No. 65302 , between Owner and City, for the purpose of assisting Owner in developing the Project; WHEREAS, as a condition to City making the Loan of the HOME Funds, Owner must agree to comply with certain occupancy, rent and other restrictions for a period of time in order to comply with the HOME affordability requirements, and agrees to convey to City certain covenants and restrictions that will burden the hereinafter described real property so that the Project will meet the HOME requirements ("HOME Requirements"); NOW, THEREFORE, in consideration of the making of the Loan of HOME Funds, and the disbursement of any part thereof, and in order to comply with the requirements of the Act and the HOME Regulations, Owner (together with its successors and assigns and subsequent owners of the Project), hereby agrees that the following restrictions shall apply to the real property described in the attached Exhibit "A", incorporated herein for all purposes: 1) In compliance with the maximum per unit subsidy amount rules at 24 CFR Part 92.250(a) and the minimum amount of assistance rules at 24 CFR Part 92.205(c), the number of units in the Project which have been designated by Owner and approved by the City as subject to DEED RESTRICTIONS - HOME Page 1 Hughes House H Apartments OFFICIAL RECORD KH 1142496.2 CITY SECRETARY FT. WORTH, TX all occupancy, rent, and affordability requirements contained in the HOME Regulations shall be 6 units of the 302 total residential townhome units in the Project ("HOME Units"). 2) The HOME Units rented or available for rent to households whose annual incomes do not exceed 80% of area median income ("AMI"), as set annually by HUD with adjustments for family size ("High HOME Eligible Tenants"), shall be 3 units ("High HOME Units"). The number of HOME Units rented or available for rent to families whose annual incomes do not exceed 50% percent of AMI ("Low HOME Eligible Tenants") shall be 3 units ("Low HOME Units"). The HOME Units are floating. 3) Owner hereby acknowledges and agrees that the Project is to be owned, managed and operated as a rental housing project for affordable housing as set forth in 24 CFR Part 92.252 and, that the HOME Units must be occupied only by HOME Eligible Households as defined in the HOME Contract and must also meet the following requirements to qualify as affordable housing and will be subject to the following restrictions and covenants: High HOME Rents. The maximum HOME rents are the lesser of: (1) The fair market rent for existing housing for comparable units in the area as established by HUD under 24 CFR Part 888.111; or (2) A rent that does not exceed 30% of the adjusted income of a family whose annual income equals 65% of AMI with applicable adjustment for the bedroom size of the relevant housing unit. High Home Rent may not exceed the maximum rent limitations established by HUD minus utility allowances. For the purposes of these Deed Restrictions, "utility allowances" are those monthly allowances for utilities (excluding telephone) adopted by City in accordance with the HOME Regulations and HUD guidance, as more particularly described in the HOME Contract. b. Low HOME Rents. Rents for Low HOME Units must meet one of the following rent requirements: (1) The rent does not exceed 30% of the annual income of a family at 50% of AMI as set annually by HUD with adjustments for family size. Low Home Rent may not exceed the maximum rent limitations established by HUD minus utility allowances. However, if the rent determined under this paragraph is higher than the applicable rent under (a) of this section, then the maximum rent for HOME Units under this paragraph is that calculated under paragraph (a); or (2) The rent does not exceed 30% of the family's adjusted income. If the family receives Federal or Texas project -based rental subsidy and the very low- income family pays as a contribution toward rent not more than 30% of the family's adjusted income, then the maximum rent (tenant contribution plus project -based rental subsidy) is the rent allowable under the Federal or Texas project -based rental subsidy program. DEED RESTRICTIONS - HOME Hughes House H Apartments KH 1142496.2 Page 2 C. The Owner will not refiise to lease a HOME Unit to a certificate or voucher holder under 24 CFR Part 982 (Section 8 Tenant -Based Assistance: Unified Rule for Tenant -Based Assistance under the Section 8 Rental Certificate Program and the Section 8 Rental Voucher Program) or to the holder of a comparable document evidencing participation in a HOME tenant -based rental assistance program because of the status of the prospective tenant as a holder of such certificate, voucher, or comparable HOME tenant -based assistance document. 4) Initial Rent Schedule and Utility Allowances. Owner must verify that all tenants of HOME Units are HOME Eligible Households with full Tenant Documentation at the time the initial lease for a HOME Unit is executed as more particularly described in the HOME Contract. Tenants must certify the number of people in tenant's household along with such person's names and ages. Owner shall obtain financial information on all members of a tenant's household. 5) Tenant Income. Owner must use the definition of annual income used by 24 CFR Part 65.609 to establish tenant income eligibility and shall use the most current HUD Income Guidelines. Owner must verify that all tenants of HOME Units are HOME Eligible Households with full Tenant Documentation as more particularly described in the HOME Contract. Owner must verify the income of the tenants of the HOME Units annually after the initial lease is executed but may use a City -approved tenant self -certification form as Tenant Documentation. Notwithstanding the foregoing, Owner must verify the income eligibility of all HOME Eligible Households with full Tenant Documentation every 6th year of the Affordability Period. Owner must maintain copies of Tenant Documentation as required under the HOME Contract. In the event that a HOME Unit is occupied by a tenant who is not a HOME Eligible Household, Owner shall have 30 days to determine if a market rate tenant qualifies as a HOME Eligible Household or fill an empty market rate unit with a HOME Eligible Household. 6) Tenant Lease and Tenant Selection. Owner's lease for the HOME Units shall comply with 24 CFR Part 92.253 as more particularly described in the HOME Contract. Owner's tenant selection policy and criteria shall be consistent with the purpose of providing housing in accordance with the HOME Regulations including addressing non—discrimination and affirmative marketing as more particularly set out in the HOME Contract. 7) The Project shall be maintained to and fully comply with all City codes and federal Housing Quality Standards. 8) The Affordability Period for the Project is 20 years ("Affordability Period"). The Affordability Period begins on the date that the project status is changed to "complete" in IDIS, HUD's project tracking system. City will provider Owner notice of the date on which the Affordability Period began within 90 days of said date. 9) The preceding use restriction and Affordability Period (i) shall run with the land, (ii) shall be binding upon the Owner and Owner's heirs, personal representatives, successors and assigns, and (iii) shall be enforceable by actions at law or in equity by the City, its successors and assigns and/or one or more third -party beneficiaries. For the purpose of these Deed Restrictions, a DEED RESTRICTIONS - HOME Hughes House H Apartments KH 1142496.2 Page 3 third -party beneficiary shall be any member of a HOME Eligible Household as defined in the HOME Regulations. Owner- hereby subjects the Project (including the Project site) to the covenants, reservations and restrictions set forth in these Deed Restrictions and Owner hereby declares its express intent that the covenants, reservations and restrictions set forth herein shall, be deemed covenants running with the land and shall, pass to and be binding upon Owner's successors in title to the Project. Each and every contract, deed or other instrument hereafter executed covering or conveying the Project or any portion thereof shall conclusively be held to have been executed, delivered and accepted subject to such covenants, reservations and restrictions as set forth in such contract, deed or other instruments. 10) Owner hereby agrees to execute further documentation required by the City or HUD which may be necessary to cause these Deed Restrictions to comply with the laws, ordinances and/or regulations referenced herein or in the Developer Loan Agreement or the City's HOME Contract, or the HOME Regulations (or any other applicable laws that supplement, amend, restate, replace or otherwise pertain to such laws, ordinances and/or regulations). 11) Sale or Transfer of the Land or Project. Until the termination of these Deed Restrictions, Owner hereby covenants and agrees not to sell, transfer or otherwise dispose of any portion of the real property or Project, without obtaining the prior written consent of the City, not to be unreasonably withheld, conditioned, or delayed. Any transfer or disposition of the real property or the Project without the written agreement of the City, in a form as will meet the requirements of a conveyance of real property in Texas, shall be null, void and without effect, shall cause a reversion of title to Owner and shall be ineffective to relieve Owner of its obligations under this document. Notwithstanding anything else in this section to the contrary, transfers by Owner to an affiliate or subsidiary in accordance with the right of first refusal and purchase option, as included in the Purchase Option Right of First Refusal Agreement between FW Hughes House 11, LP, FW Hughes House II GP, LLC and Fort Worth Affordability, Inc. shall not require City's consent; however, Owner shall provide City notice within 30 days of the transfer's completion. The new owner shall be required to assume all obligations of Owner hereunder. 12) Owner and City hereby declare their understanding and intent that the covenants, reservations and restrictions set forth herein directly benefit the real property. 13) Default; Remedies. City shall declare an "Event of Default" to have occurred hereunder if City becomes aware or is notified in writing of a default in the performance or observance of any covenant, agreement or obligation of Owner set forth in these Deed Restrictions, and if such default remains uncured for a period of 60 days after written notice of such default shall have been given by City to Owner, or if such default is not able to be cured within 60 days, if Owner is not diligently pursuing a cure, in City's sole discretion. No failure to exercise and no delay in exercising any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof, or the exercise of any other right. The rights and remedies herein provided shall be in addition to all other rights or remedies provided by law. No modification or waiver of any provision of these Deed Restrictions, or consent to departure here from, shall be effective unless in writing and signed by the parties and no such modification, consent, or waiver shall extend DEED RESTRICTIONS - HOME Page 4 Hughes House H Apartments KH 1142496.2 beyond the particular case and purpose involved. No notice or demand given in any case shall constitute a waiver of the right to take other action in the same, similar or other instances without such notice or demand. 14) Owner shall cause this document, and all amendments and supplements hereto and thereto, to be recorded and filed in the real property records of Tarrant County and in such other places as City may reasonably request. Owner shall pay all fees and charges incurred in connection with any such recording. 15) These Deed Restrictions shall be governed by the laws of the State of Texas. 16) Headings and titles herein are for convenience only and shall not influence any construction or interpretation. 17) If any provision of these Deed Restrictions shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining portions hereof shall not in any way be affected or impaired thereby. 18) All terms not defined herein shall have the meaning proscribed to them in the City's HOME Contract. If any provision of these Deed Restrictions conflicts with any provision of the HOME Contract, the provisions of the HOME Contract will govern to the extent of the conflict. [Signature Pages to Follow] DEED RESTRICTIONS - HOME Hughes House II Apartments KH 1142496.2 Page 5 IN WITNESS WHEREOF, Owner and the City have executed this document by duly authorized representatives, all on the dates indicated below. OWNER: FW Hughes House H, LP, a Texas limited partnership By: FW Hughes House H GP, LLC, a Texas limited liability company, its general partner By: Fort Worth Affordability, Inc., a Texas nonprofit corporation, its sole member By: Name: ary Marg r t Le ons Title: Secretary/Treasure STATE OF TEXAS COUNTY OF TARRANT I HEREBY CERTIFY that on or about this V day of 2026, before me, a Notary Public for the state aforesaid, personally appeared Mary -Margaret Lemons, known to me or satisfactorily proven to be the person whose name is subscribed to the foregoing or attached docurnent, who acknowledged that she is the Secretary/Treasurer of Fort Worth Affordability, Inc., a Texas nonprofit corporation, the sole member of FW Hughes House II GP, LLC, a Texas limited liability company, the general partner of FW Hughes House II, LP, a Texas limited partnership; that she has been duly authorized to execute, and has executed, such instrument on its behalf for the purposes therein set forth; and that the sarne is its act and deed of said limited partnership. IN WITNESS WHEREOF, I have set my hand and Notarial Seal, the day and year first above written. otary Public, St*teofexas SUMER SAUERS SN." Notary ID #124676109 My Commission Expires January 11, 2030 DEED RESTRICTIONS - HOME Page 6 Hughes House H Apartments IN WITNESS WHEREOF, Owner and the City have executed this document by duly authorized representatives, all on the date first written hereinabove. ATTEST: QFORT�IIII oQpF,000 k,Ap p F." 09.10 aQIIcn�z 656gb City Secretary M&C 25-1107 Dated 12/09/2025 Form 1295: CITY OF FORT WORTH By: _ WWI" Dana Burgh ff, Ass s nt City Manager Date: -1 I I / ?— , APPROVED AS TO FORM AND LEGALITY: 4.1.,. Hunt (AA II. 2026 17,09-37 CDT) Leslie L. Hunt, Senior Assistant City Attorney STATE OF TEXAS § COUNTY OF TARRANT § This instrument was acknowledged before me on J Uc� , 2026, by Dana Burghdoff, Assistant City Manager of the City of Fort Worth, a Texas home rule municipality, on behalf of such municipality. Notarv ublic, 9tate of Texas Jessica F wver Expires My Commission Expires * 10/13/2029 Notary ID135535933 OFFICIAL RECORD CITY SECRETARY FT. WORTH, TX DEED RESTRICTIONS - HOME Page 7 Hughes House H Apartments EXHIBIT "A" Legal Description Tract 1: Being all of Lot 1, Block C, J.A. CAVILE PLACE ADDITION, an Addition to the City of Fort Worth according to plat recorded in Instrument No. D226034103, Official Public Records, Tarrant County, Texas. Tract 2: Being all of Lot 2, Block C, J.A. CAVILE PLACE ADDITION, an Addition to the City of Fort Worth according to plat recorded in Instrument No. D226034103, Official Public Records, Tarrant County, Texas. Tract 3: Being all of Lot 3, Block C, J.A. CAVILE PLACE ADDITION, an Addition to the City of Fort Worth according to plat recorded in Instrument No. D226034103, Official Public Records, Tarrant County, Texas. DEED RESTRICTIONS - HOME Page 8 Hughes House H M&C Review Page 1 of 5 0 Official site of the City of Fort Worth, Texas CITY COUNCIL AGEND FoRT�WORTII Create New From This M&C DATE: 12/9/2025 REFERENCE **M&C 25- LOG NAME: 19HUGHES HOUSE II — NO.: 1107 HOME UDAG FUNDS CODE: C TYPE: CONSENT PUBLIC NO HEARING: SUBJECT: (CD 5) Approve Financial Actions in Support of Hughes House II Apartments Located at 1401 Etta Street as Part of the Choice Neighborhoods Implementation Grant for the Cavile Place/Historic Stop Six Area Consisting of (A) Authorizing (i and ii) Expenditure of $2,000,000.00 of HOME Investment Partnerships Program Grant Funds as a Non - Forgivable Loan to FW Hughes House II, LP, or an Affiliate, Which Loan May Convert to Forgivable on Specified Conditions being Met, and Execution of Related Contracts; (iii and iv) Expenditure of $450,000.00 of Urban Development Action Grant Miscellaneous Revenue as a Loan to Fort Worth Affordability Inc., and Execution of Related Contracts; (v) Acceptance of Assignment from Fort Worth Affordability Inc., of Contracts and Loan Documents for its Loan to FW Hughes House Il, LP; (vi) Authorization of Assignment from Fort Worth Affordability Inc. to FW Hughes House II, LP. of Federal Grant Obligations; (vii and viii) Authorize Execution of Necessary Amendments and Extensions to All Contracts and Documents to Facilitate Project Completion; (ix) Authorize Execution of Agreement with Fort Worth Housing Solutions for the Conversion of the HOME Investment Partnerships Program Loan to Forgivable Under Specified Conditions; and (x) Authorize the Substitution of Funding Years; (B) Find that the Loans Serve a Public Purpose and that Adequate Controls are in Place; and (C) Adopt Appropriation Ordinance RECOMMENDATION: It is recommended that the City Council: 1. Authorize expenditure in the amount of $2,000,000.00 of HOME Investment Partnerships Program grant funds in the form of a non -forgivable loan to Hughes House II, L.P.; 2. Authorize execution of an agreement with the Housing Authority for the City of Fort Worth, Texas, doing business as Fort Worth Housing Solutions, to allow for the conversion of the non -forgivable HOME Loan to a forgivable loan so long as conditions are met, including without limitation the condition that the Project is directly or indirectly owned 100\% by Fort Worth Affordability Inc., Fort Worth Housing Solutions and/or an affiliate thereof, following expiration of the Project's compliance period; 3. Authorize expenditure in the amount of $450,000.00 of Urban Development Action Grant Miscellaneous Revenue as a forgivable loan to Fort Worth Affordability Inc.; 4. Authorize the City Manager, or his designee, to execute all related contracts, loan documents, and other documents necessary for lending activities with terms as specified below; 5. Authorize the acceptance of an assignment to City by Fort Worth Affordability, Inc. of the loan documents for the $450,000.00 loan to be made by Fort Worth Affordability Inc.; 6. Authorize the assignment of the UDAG obligations from Fort Worth Affordability Inc., to FW Hughes House II, LP to ensure compliance with applicable federal regulations; 7. Authorize the City Manager or his designee to extend the contracts if such extensions are necessary for completion of the Project, and to extend all other required documents for lending activities as necessary for the development of the Project; 8. Authorize the City Manager, or his designee, to amend the contracts and other required documents if necessary to achieve project goals, provided that the amendments are within the scope of the Project and in compliance with City policies and applicable laws and regulations governing the use of federal funds; 9. Find that providing a forgivable UDAG loan and a non -forgivable HOME Loan that may be converted to forgivable so long as certain conditions are met, serves the public purpose of providing decent, safe, and sanitary housing for low-income residents and that adequate controls are in place through the various loan documents and agreements to ensure the public purpose is carried out; 10. Authorize the 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; http://apps.cfwnet.org/council_packet/mc_review.asp?ID=33969&councildate=12/9/2025 1 /21 /2026 M&C Review Page 2 of 5 11. Accept interest revenue and miscellaneous revenue receipts in the Grants Operating Other Funds account; and 12. Adopt the attached appropriation ordinance increasing estimated receipts and appropriations in the Grants Operating Other Fund, in the amount of $643,224.31, from Urban Development Action Grant Miscellaneous Revenue Program Income, for the purpose of funding future projects. DISCUSSION: The purpose of this Mayor and Council Communication (M&C) is to approve financial actions in support of an affordable housing development in the Cavile Place/Historic Stop Six area as part of the multi -year Choice Neighborhoods Implementation grant. On October 22, 2019, Mayor and Council M&C 19-0268 authorized the City to partner with Fort Worth Housing Solutions (FWHS) as a co -applicant for a Choice Neighborhoods Implementation (CNI) grant from the U.S. Department of Housing and Urban Development (HUD). The City Council also adopted a revised Cavile Place/Historic Stop Six Neighborhood Transformation Plan and committed $39,375,654.00 over six years for improvements in the area, contingent on receiving the grant. In spring 2020, the City was notified that the City and FWHS had been awarded the CNI grant. As co -applicant, the City agreed to support FWHS in implementing the Transformation Plan by providing resources for eligible activities, including a commitment of $3,000,000.00 in HOME Investment Partnerships Program (HOME) funds, $3,250,000.00 in Community Development Block Grant (CDBG) funds, and $1,110,000.00 in Urban Development Action Grant (UDAG) funds, for a total of $7,360,000.00 to be awarded over six years. During the implementation of the Transformation Plan, when the Hughes House project was presented to City Council (M&C 22-0400), the Council was informed that instead of allocating $500,000.00 in CDBG funds per development phase of the CNI, the funding would be revised to $1,000,000.00 in HOME funds. This change was made because CDBG funds are more difficult to use for new housing construction, while HOME funds are more flexible and easier to utilize under federal regulations.ln addition to the funding commitment, in March 2021 President Biden signed the American Rescue Plan Act providing aid relief to various sectors of the national economy. Through the ARPA allocations that the City of Fort Worth received, city staff recommended that a total of $400,000.00 be provided to the first four phases of the CNI developments totaling $1,600,000.00 in ARPA funds (M&C 21-0814). All CNI development phases have been approved by City Council. Due to the nature of the implementation of the Transformation plan, funding allocations might have differed due to regulatory adherence. In addition to HOME and UDAG funding, The Fort Worth Housing Finance Corporation (FWHFC) authorized the expenditure of $1,250,000.00 to be used for the development of Permanent Supportive Housing (PSH) and $1, 250,000.00 for construction in permanent loans for financing the developments (Resolution No. 2019-06). Of that $1,250,000.00 in PSH funds, $525,000.00 has been authorized in the form of a forgivable loan for 21 PSH units for the Project (Resolution No. FWHFC- 2025- 01). Approval of this M&C allows the Project to move forward with the fourth phase of the six -year Transformation Plan and award $2,000,000.00 in HOME funds and $450,000.00 in UDAG funds for a total of $2,450,000.00 to be used for eligible activities for the Project. The table below outlines the City's funding commitment for each phase of the Stop Six Choice Neighborhood Implementation Grant, demonstrating its contributions to the Transformation Plan. The figures below do not include the $27 million in 2022 Bond funds allocated for construction of the community Hub. Funding Source Cowan Place: Phase I Hughes House: Phase II Babers Manor: Phase III Hughes House II: Phase IV Hughes House III: Phase V Total funding per source HOME $500,000.00 $1,000,000.00 $1,000,000.00 $2,000,000.00 $- $4,500,000.00 UDAG $360,000.00 $150,000.00 $150,000.00 $450,000.00 $- $1,110,000.00 CDBG PSH FWHFC ]$225,000.00 $1,250,000.00 $- $325,000.00 $- $100,000.00 $ $525,000.00 $- $75,000.00 $1,250,000.00 $1,250,000.00 HFC Vnstruction $1,250,000.00 $- $- 11 $ $- $1,250, 000.00 ARPA $400,000.00 $400,000.00 $- $400,000.00 $400,000.00 $1,600,000.00 $3,985,000.00 $1,875,000.00 $1,250,000.00 $3,375,000.00 $475,000.00 $10,960,000.00 http://apps.cfwnet.org/council_packet/mc_review.asp?ID=33969&councildate=12/9/2025 1 /21 /2026 M&C Review Page 3 of 5 Funding Source Cowan Place: Phase I Hughes House: Phase II Babers Manor: Phase III Hughes House II: Phase IV Hughes House III: Phase V Total funding per source TOTAL funding to L-IL each phase The Hughes House II Apartments will be a newly developed, affordable multifamily community designed to support mixed income levels. The project will feature 302 residential units in a mix of 1-, 2-, 3-, and 4-bedroom floor plans. Of these, 89 units will be project -based voucher (PBV) apartments reserved for returning families from Cavile Place; 112 units will be income -restricted for households earning 60\% or less of the area median income (AMI); 80 units will be offered at market rate; and 21 units will provide Permanent Supportive Housing (PSH) for individuals experiencing chronic homelessness. The development will consist of eleven buildings, including two with elevator access, ensuring accessibility and convenience for all residents. It is anticipated that the construction of Hughes House II will begin in the first quarter of 2026 and take 26 months to reach substantial completion. FW Hughes House II, L.P. (Developer) will develop and own the Project. It is a Texas limited partnership consisting of FW Hughes House II, LLC as the general partner (owned by FWHS or an affiliate), and Cavile Place MBS SLP, Inc. as a special limited partner (owned by McCormack Baron Salazar, Inc.) Fort Worth Affordability, Inc. (FWAI) a Texas nonprofit corporation, which is the managing member of FW Hughes House II GP, LLC, is an instrumentality of FWHS, and has requested to be the initial borrower of the UDAG funds ("UDAG Loan Funds") instead of the Developer for tax purposes. FWAI will execute a loan agreement and promissory note in favor of the City for the UDAG Loan Funds and simultaneously loan the UDAG Loan Funds to the Developer for the development of the Project. To collateralize the loan from the City to FWAI and ensure compliance with federal requirements, FWAI will (1) assign its loan documents (from the loan from FWAI to the Developer) to the City and (2) assign its obligations under the City's UDAG contract to the Developer. To further the implementation of the Transformation Plan and aid the infrastructure improvements in support of the Project, staff recommends the following loan terms and conditions: HOME Loan Terms: 1. Loan term to commence on execution of the loan documents and terminate 40 years after project stabilization. Payment of principal and accrued, unpaid interest will be due 40 years after project conversion coterminous with final payment date of permanent loan; 2. Interest rate of zero percent so long as borrower complies with all of the terms of the contract and loan documents; 3. Performance of the HOME requirements and payment of the HOME loan, if required, will be secured by a deed of trust and HOME Deed Restrictions on the real property through the affordability period or the loan term, whichever is longer; 4. Affordability period to begin on the date the project status is changed to "Complete" in the Integrated Disbursement and Information System (IDIS) and continue for 20 years thereafter; 5. HOME loan to be subordinate to any construction/permanent financing and any financing provided by Fort Worth Housing Finance Corporation; 6. HOME -assisted units will be designated according to the HOME regulations with a 20-year affordability period; 7. HOME funds will be provided on a reimbursement basis for eligible costs only; and 8. Development and operation will comply with all HOME Regulations in 24 CFR Part 92 et seq. The expenditure of HOME funds is conditioned upon the following: Satisfactory underwriting in accordance with federal guidance for use of HOME funds and City policies for funding of HOME units; Compliance with all HOME requirements contained in 24 CFR Part 92 et seq; Construction and permanent financing acceptable to City; Satisfactory completion of an environmental review pursuant to 24 CFR Part 58; Receipt of authorization to use grant funds from HUD; Receipt of acceptable, fully executed loan documents; and Closing on all other financing for the Project. Approval of this M&C also authorizes the City to convert the HO Loan from a repayment loan to a forgivable loan only if FWHS, FWAI, or an affiliate acquires either (i) the Project in fee simple or (ii) 100\% of the interest in http://apps.cfwnet.org/council_packet/mc_review.asp?ID=33969&councildate=12/9/2025 1 /21 /2026 M&C Review Page 4 of 5 Development following the expiration of the compliance period. For the avoidance of doubt, the HOME Loan shall not be forgivable unless the Project is directly or indirectly owned 100\% by FWHS, FWAI and/or an affiliate thereof. This M&C further authorizes the City to execute an agreement with FWHS to memorialize the terms on which the loan will be converted to forgivable. In the event the HOME Loan is converted to a forgivable loan, it shall only be forgiven if all loan terms and conditions are met and FWHS/Developer has complied with all City and HOME regulations and requirements. UDAG Loan Terms: 1. Loan term to commence on the date of execution and terminate 40 years after project stabilization. Final payment of principal and accrued, unpaid interest will be due 40 years after project conversion coterminous with final payment date of permanent loan; 2. Performance period to begin on the date the project status is changed to "Complete" in the Integrated Disbursement and Information System (IDIS) and will continue for 5 years thereafter; 3. UDAG funds to be subordinate to any construction/permanent financing, the City's HOME loan, and any financing provided by the Fort Worth Housing Finance Corporation; 4. Interest rate of zero percent so long as borrower complies with all of the terms of the contract and loan documents; 5. UDAG funds will be used for eligible construction costs associated with the new multifamily housing construction; 6. UDAG funds will be used in compliance with all CDBG requirements contained in 24 CFR Part 570, including but not limited to the Project being located in a CDBG-eligible census tract and will accomplish the public benefit of furthering a CDBG National Objective of promoting activities that benefit low -and -moderate income residents; 7. Developer must or must require property management company to employ the equivalent of at least 2 full-time positions for Central City residents at all times during the performance period; 8. UDAG funds shall be repaid by FWAI to the extent FWAI receives repayment from Developer; 9. UDAG funds shall be forgiven if all terms and conditions are met, FWAI has not received any repayment from Developer, and Developer has complied with all City and CDBG regulations and requirements; and 10. UDAG funds will be provided on a reimbursement basis for eligible construction costs only. Staff recommends approving the expenditure and execution of contracts and related loan documents with FWAI and Developer in the amount of $2,000,000.00 in HOME funds and $450,000.00 in UDAG funds, for the construction costs in support of the Project; approving acceptance of the collateral assignment by FWAI to City of related UDAG loan documents, and approving the assignment of the related UDAG obligations from FWAI to the Developer; and approval of an agreement between FWHS and the City memorializing the conditions under which the HOME Loan may be converted to a forgivable loan. Through this M&C, the City Council finds that the Project serves a public purpose by assisting the City in fulfilling its goals under the Choice Neighborhoods Implementation Grant, Transformation Plan, by providing quality, accessible, affordable housing for low- to moderate- income residents and supporting economic development and revitalization, and that the forgivable UDAG loan and the HOME Loan that may be converted to forgivable so long as the conditions listed above are met, are vital to the financial feasibility of the Project. The Council further finds that adequate controls are in place through the various loan documents and agreements to ensure that the public purpose is carried out. Approval of this M&C also allows Action Plan funding years to vary and be substituted in order to expend the oldest grant funds first. Appropriations supporting the HOME Loan will come from the annual program appropriation for the funding years against which the loan is booked. A public comment period was held from June 1,2025 through July 1, 2025; no comments were received. UDAG Miscellaneous Revenue funds are rental revenues received from the lease of the City -owned parking garage under General Worth Square (City Contract No. 11085). UDAG Funds must be used for projects that meet certain CDBG program requirements, including use in a CDBG-eligible area, qualification as a CDBG economic development project and inclusion of private investment. Annual revenue from the parking garage is approximately $108,000.00. Currently the City has an appropriated balance of $463,639.38 in UDAG funds. In addition, the City is in receipt of but has not appropriated a total of $643,224.31 of UDAG Funds from prior years. After funding this loan, and after all funds have been appropriated, the garage rental revenues account will have a remaining balance of approximately $656,863.69. Adoption of the attached appropriation ordinance will appropriate the current balance of program revenue with the balance of appropriated funds to be programmed for other eligible projects in the future. http://apps.cfwnet.org/council_packet/mc_review.asp?ID=33969&councildate=12/9/2025 1 /21 /2026 M&C Review Page 5 of 5 FISCAL INFORMATION/CERTIFICATION: The Director of Finance certifies that funds are currently available in the Hyatt Regency Parkg Garage Rev, Home Grant (PY24/FY25) and in the Home (PY22/FY23) projects within the Grants Operating Federal Fund and the Grants Operating Other Fund, and upon approval of the above recommendations, funds will be available in the Grants Operating Federal Fund and the Grants Operating Other Fund to support the loan contract. The Neighborhood Services Department (and Financial Management Services) will be responsible for the collection and deposit of funds due to the City. Prior to an expenditure being incurred, the Neighborhood Services Department has the responsibility to validate the availability of funds. This is a reimbursement grant. 'O Fund Department Account Project Program Activity Budget Reference # Amount ID ID Year (Chartfield 2) Fund Department Account Project Program Activity Budget Reference # Amount ID I I ID Year (Chartfield 2) Submitted for City Manager's Office by: Originating Department Head: Additional Information Contact: Dana Burghdoff (8018) Kacey Thomas (8187) Chad LaRoque (2661) Lilian Bastidos (8454) ATTACHMENTS FID Table HUGHES lI.xlsx (CFW Internal) Funds Availability HH Il.docx (CFW Internal) ORD.APP 19HUGHES HOUSE II — HOME UDAG FUNDS 21003 A026.docx (Public) http://apps.cfwnet.org/council_packet/mc_review.asp?ID=33969&councildate=12/9/2025 1 /21 /2026 FORT WORTHO City Secretary's Office Contract Routing & Transmittal Slip Contractor's Name: HOME Deed Restrictions Subject of the Agreement: City has agreed to lend Owner $1,000,000.00 in HOME funds (the "Loan"), pursuant to the requirements of the HOME program and in accordance with all obligations assigned to it from that certain HOME Contract, City Contract No. 65302 between Borrower and City, for the purpose of assisting Borrower in developing the Project M&C Approved by the Council? * Yes 9 No ❑ If so, the M&C must be attached to the contract. Is this an Amendment to an Existing contract? Yes ❑ No B If so, provide the original contract number and the amendment number. Is the Contract "Permanent"? *Yes B No ❑ If unsure, see back page for permanent contract listing. Is this entire contract Confidential? *Yes ❑ No B If only specific information is Confidential, please list what information is Confidential and the page it is located. Effective Date: Date of execution of the contract Expiration Date: If different fi-om the approval date. If applicable. Is a 1295 Form required? * Yes 9 No ❑ *If so, please ensure it is attached to the approving M&C or attached to the contract. Project Number: If applicable. *Did you include a Text field on the contract to add the City Secretary Contract (CSC) number? Yes 8 No ❑ Contracts need to be routed for CSO processing in the following order: 1. Katherine Cenicola (Approver) 2. Jannette S. Goodall (Signer) 3. Allison Tidwell (Form Filler) *Indicates the information is required and if the information is not provided, the contract will be returned to the department.