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HomeMy WebLinkAbout12/01/1992, C-6 - HOUSING AUTHORITY REQUEST TO REASSIGN LEASE FOR CITY OWNED PROPERTY LOCATED AT 1090 ORCUTT ROAD city of San lues OBISPO METING DI. COUNCIL AGENDA REPORT ITEM NUMBER: FROM: Ken Hampian, Assistant City Administrative Officer Prepared By: Deb Hossli, Administrative Analyst; SUBJECT: Housing Authority request to reassign lease for City owned property located at 1090 Orcutt Road CAO RECOMMENDATION: Approve and authorize the Mayor to execute assignment of Agreement A-24-91-CC for City owned property at 1090 Orcutt Road from the Housing Authority to the San Luis Obispo Non-Profit Housing Corporation to carry out a low income housing project for the elderly and handicapped. DISCUSSION: In April of 1991, the City entered into a fifty-five year lease with the Housing Authority for the development of low income housing for the elderly and handicapped on City owned property located at 1090 Orcutt Road (See Attachment 1 for location map). As set out in the lease, the Housing Authority agreed to construct a minimum of eighteen low income rental units on the site. The City, in turn, agreed to provide the property for $1 per year (See Attachment 2 for original lease). Since City Council approval of the lease agreement,the Housing Authority has completed the design for the project, received all necessary planning approvals, and expects to be in the position to apply for a building permit by late December. Assuming the project continues to proceed on schedule, construction will begin in spring and conclude by late summer. The final project design includes nineteen, one bedroom units for the elderly and five, two bedroom units for the handicapped. The total cost of the project is estimated at $1.6 million. When the City Council executed the lease, Housing Authority representatives indicated that they intended to apply for tax credits to lower the costs of the housing development (thereby insuring its financial viability), and if successful, would need to set up a non-profit corporation to carry out the project (this is a legal requirement as public agencies cannot use tax credits directly). At that time it was also explained that if a non-profit corporation was created to take advantage of the tax credit program, it would be necessary for the City Council to formally reassign the lease for the Orcutt Road property from the Housing Authority to the non-profit corporation (requiring City Council.approval of an assignment is a common provision in our lease agreements to insure that any successor to a lease is capable of fulfilling the terms and conditions). The Housing Authority recently learned that they were successful in securing tax credits to offset approximately $900,000 of costs of the housing project (See Attachment 3). As such, the Housing Authority has requested the City to assign their interest in the lease for 1090 Orcutt Road to the San Luis Obispo Non-Profit Housing Corporation. The Corporation was set up in 1990 solely to facilitate financing for public housing projects r 1i111diIIIIIj�Iliil�lll city of san tins OBISPO WIGOCOUNCILAGENDA REPORT and is legally sanctioned by the State and Federal Governments. The assignment will allow the Corporation to carry out the housing project under the same terms and conditions as agreed to by the Housing Authority - the only difference being that tax credits will be used to reduce the cost of the project. The Corporation will contract with the Housing Authority to manage the project. This same approach has been successfully used in the past by the Housing Authority to develop low income housing on Poinsettia Street in the City. Staff has reviewed the Housing Authority's request to assign the lease to the San Luis Obispo Non-Profit Housing Corporation and concluded that the Corporation is capable of fulfilling the terms and conditions of the existing lease agreement. Therefore, staff recommends approval of the assignment so that project can proceed as scheduled. CONCURRENCES: The Housing Authority concurs with the contents of this report and agreement. FISCAL IMPACT: None. ATTACHMENTS: i Agreement 1 - Site map 2 - Original agreement 3 - Letter from California Tax Credit Allocation Committee I:ha.agr I ASSIGNMENT OF AGREEMENT A-24-91-CC BETWEEN THE CITY OF SAN LUIS OBISPO AND THE HOUSING AUTHORITY OF THE CITY OF SAN LUIS OBISPO FOR CITY OWNED PROPERTY LOCATED AT 1090 ORCUTT ROAD FROM HOUSING AUTHORITY OF THE CITY OF SAN LUIS OBISPO TO THE SAN LUIS OBISPO NON-PROFIT HOUSING CORPORATION Whereas, in April of 1991 the City Council deemed City owned property located at 1090 Orcutt Road as surplus to City needs; and Whereas, the City Council subsequently leased (Agreement A-24-91-CC, hereafter referred to as the Original Lease Agreement) the 1090 Orcutt Road property to the Housing Authority of the City of San Luis Obispo for a fifty-five year period to develop an elderly and handicapped housing project; and Whereas, the Housing Authority of the City of San Luis Obispo has requested to assign their interest in the Original Lease Agreement to their affiliate, the San Luis Obispo Non-Profit Housing Corporation, which was created in 1990 for the purposes of securing advantageous financing for public housing projects; and Whereas, the lease assignment will allow the Housing Authority of the City of San Luis Obispo to secure tax credits that will significantly reduce the cost of the elderly and handicapped housing development; and Whereas, the Original Lease Agreement between the City and the Housing Authority of the City of San Luis Obispo requires written approval from the City Council for any lease assignments to insure that the successor is capable of fulfilling the terms and conditions of the Original Lease Agreement; Whereas,the City has reviewed the performance of the San Luis Obispo Non-Profit Housing Corporation and concluded that the Corporation is capable of fulfilling the terms and conditions of Original Lease Agreement between the City and Housing Authority of the City of San Luis Obispo. Now,therefore, in consideration of the mutual covenants, conditions, promises and agreements herein, the City and the Housing Authority of the City of San Luis Obispo hereby agree to the following: 1. The City hereby consents to the assignment of the Original Lease Agreement with the Housing Authority of the.City of San Luis Obispo for City owned property located at 1090 Orcutt Road to the San Luis Obispo Non-Profit Housing Corporation for the purposes of developing an elderly and handicapped housing project. 2. The San Luis Obispo Non-Profit Housing Corporation, hereby assumes and agrees to fulfill all terms and conditions in the Original Lease Agreement between the City and the Housing Authority of the City of San Luis Obispo, and the same shall remain in full force and effect. L'-�-3 In witness whereof this agreement has been executed by: APPROVED: City of San Luis Obispo By: Mayor Peg Pinard Housing Authority of the City of San Luis Obispo By: San Luis Obispo Non-Profit Housing Corporation By: ATTEST: Diane Gladwell, City Clerk APPROVED AS TO FORM: a.d.G✓ ✓,d trJbrg nse , Cib Attorney i:ha.agr C�a"�f - 5- +v w,,, 9s. o�. T J .r of .�r N.,[ a i� �a /Qa 4 � O, r• $• _, _ Lr: der, ,� 9 � ' cz I if 4.00 p ` v� ! Ac N ORC UTT- rr / z CO I aryAJb / Rp )Vo' 34 r • . r ' tiwmltin p City Of r 04-961-47 all San tuts OBISPO Vacant Department of Community Development Laurel & Orcutt 990 Palm Straet!Poat Office Bo: 321, San Lula Obispo. CA 93AOs Public Works ATTACHMENT 1 ATTACHMENT 21 AGREEMENT A-24-91-CC CITY OF SAN LUIS OBISPO Lease-Agreement with the Housing Authority for Property Located at 1090 Orcutt Road in San Luis Obispo, California This agreement is made and entered into this 29th day of April , 1991, by and between the Housing Authority of the City of San Luis' Obispo, a public corporation, hereinafter referred to as "Housing Authority" and the City of San Luis Obispo, a charter municipal corporation, hereinafter referred to as "City". WITNESSETH: WHEREAS, the City Council has conceptually agreed to surplus City-owned property located at 1090 Orcutt Road in San Luis Obispo; WHEREAS, the City Council has conceptually agreed to enter into a long term lease with the Housing Authority for the construction and operation of an elderly and low income housing project on the 1090 Orcutt Road property; WHEREAS, use of the 1090 Orcutt Road property for a low income housing project is consistent with goals set-out in the City's Housing Element and Property Management Manual; WHEREAS, it has been determined that use of the 1090 Orcutt Road property for elderly and handicapped low income housing conforms with the City's General Plan; NOW, THEREFORE, IT IS AGREED, by and between the parties hereto as follows: I. City agrees: A. To lease property located at 1090 Orcutt Road, San Luis Obispo, California as described in Exhibit "A" (Assessor's Parcel Number: 004-961-047) to the Housing Authority for a period of fifty-five years commencing upon the execution of this agreement at a cost of $1 per year payable on July l of each year. B. To negotiate in good faith toward a mutually acceptable extension to this agreement with the Housing Authority at. the end of the fifty-five year term. The sole purpose of an extension under this agreement shall be to provide for the continuation of affordable housing to lower income families. II. Housing Authority agrees: A. To secure permanent financing for the construction and operation of a minimum of eighteen elderly and handicapped low income housing units on the 1090 Orcutt ATTACHMENT 2 d4.6 A-24-91-CC (R 6966) ATTACHMENT 21 (CONT) Road site. Fee title to the property shall not be subrogated in any way to any such financing. . B. To develop the project in accordance with the development review policies and regulations of the City of San Luis Obispo. C. Tb adhere to the easements for City utilities as outlined in Exhibit "B". D. To complete the development of the project within two years of securing a building permit from the City of San Luis Obispo. If a building permit is not obtained within five years following the execution of this lease agreement, this agreement shall be considered void. E. To operate the project during the initial term as a low income housing project. All housing units will be rented to households with incomes at or below 80% of the County's median income level (adjusted for ' household size) as established by the Federal Department of Housing and Urban Development (HUD) or its successor agency. Reports verifying low income household occupancy of the project will be provided to the City by January 31 of each year throughout the term of this agreement. F. To obey all laws, rules, and regulations, whether municipal, State or Federal, applicable to the operation of the project as a low income housing project. G. To maintain insurance coverage throughout the term of the lease as described in Exhibit "C". III. General: A. Transfer of the Development. Express prior written approval of the City Council is required for the sale, transfer, assignment or conveyance of the project by the Housing Authority. Such approval shall not be unreasonably withheld, provided that the following terms are incorporated into any transfer agreement: 1. The Housing Authority successor in interest agrees to assume the obligations relating to this agreement for the duration of the agreement. 2. The Housing Authority successor in interest is an eligible sponsor and demonstrates to the satisfaction of the City that it can successfully own and operate a low income housing .project. - B. Expiration of Agreement. Upon expiration of this agreement or any extension, the 1090 Orcutt Road site and all improvements made to the site will become the sole ATTACHMENT 21 (CONT) property of the City. The City has no legal obligation for reimbursement or compensation of any kind to the Housing Authority. At City's sole option and request, Housing Authority shall execute a quit claim deed to City conveying any and all right, title and interest in the property to City upon expiration. C. Violation of Agreement. In the event that the Housing Authority violates any of the terms of this agreement, the City will give written notice to the Housing Authority by registered or certified mail. If such violation is not corrected to the satisfaction of the City within thirty days after the date of such notice is mailed (or within a time period the City, at its sole discretion, may permit) the City may without further prior notice, declare in writing a default under the agreement. Under any such declaration of default, the City may apply to any court, State or Federal, for specific performance of this agreement; for an injunction against any violation of this agreement by the Housing Authority, requiring repayment of excess rentals to tenants; requesting judicial appointment of a receiver to take over and operate the property in accordance with the terms of this agreement; or for such other relief as the City deems appropriate, it being agreed by the Housing Authority that the injury to the City arising from a default under any terms of the agreement would be irreparable and that it would be extremely difficult to ascertain the amount if compensation to the City which would be adequate relief in light of the purpose of the project. D. Amendment. This agreement shall not be modified or amended except in writing. No such amendment shall be effective without prior approval of the City and Housing Authority. E. Partial Invalidity. If any provisions of this agreement are deemed invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not be affected or impaired. F. Bindings on successors. This agreement shall bind the respective parties hereto, their legal representatives, executors, administrators, successors or assigns. The Housing Authority may not assign this agreement or any of its obligations hereunder voluntarily or by operation of law, without prior approval of the City. G. Governing Law. This agreement shall be construed in accordance with, and governed by, the laws of the State of California, unless otherwise governed by Federal Law. ATTACHMENT 21 (CONT) H. Hold Harmless. Neither the City nor any officer, agent or employee thereof shall be responsible for any damage or liability occurring by reason of any act or omission of the Housing Authority or its employees, agents, associates, contractors, sub-contractors, materialmen, laborers or any other persons, firms, or corporations furnishing or supplying work, service, materials or supplies in connection with the Housing Authority's performance of this .agreement. The Housing Authority agrees to fully indemnify, defend and hold the City harmless from any liability imposed, including attorney's fees and costs, for any injury to person or property occurring by reason of any act or omission of the Housing Authority arising out of this agreement. I. Attorneys Fees. In the event of any controversy, claim, or dispute between the parties arising out of or relating to this agreement or breach thereof, the prevailing party shall be entitled to recover from the losing party reasonable expenses, attorneys fees and costs. J. Recordation. This agreement shall be acknowledged by each of the parties and recorded in the oficial records of the County of San Luis Obispo. This agreement shall terminate on April 29, 2046, fifty-five years following the execution of this agreement, unless further extended by written mutual agreement of the parties. IN WITNESS WHEREOF this agreement has been executed by: THE HOUSING AUTHO TY OF SAN IS OBISPO By: i / �BISPO APPRO E CITY OF SAN LUIS By; _. -.. ..�_.. . ..Gl..._c - r MAYOR RON DUNIN ATTEST: . CITY ('LERK PAM V E APPROVED AS TO FORM: 1VfIAT RNE EF JORGENSEN dh\HA-AGRE ATTACHMENT 21 (CONT) DESCRIPTION THAT PORTION 0•F LOT 3 IN SECTION 1 OF TOWNSHIP 31 SOUTH, RANGE 12 EAST, MOUNT DIABLO MERIDIAN, IN THE CITY OF SAN LUIS OBISPO, COUNTY OF SAN LUIS OBISPO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT OF SAID LAND FILED IN THE DISTRICT LAND OFFICE DECEMBER 13, 1875 DESCRIBED AS FOLLOWS : BEGINNING AT THE INTERSECTION OF THE CENTER LINE OF ORCUTT ROAD, 40 FEET WIDE, WITH THE CENTER LINE OF LAUREL LANE, 40 FEET WIDE; THENCE ALONG THE CENTERLINE OF SAID LAUREL LANE, NORTH 300 40 ' EAST, 303 . 74 FEET; THENCE SOUTH 590 20 ' EAST 38 . 00 FEET TO THE TRUE POINT OF BEGINNING; THENCE CONTINUING SOUTH 590 20 ' EAST 100 . 00 FEET; THENCE SOUTH 300 40 ' WEST 39 . 89 FEET, TO THE NORTHERLY LINE OF THE LAND DESCRIBED IN THE DEED TO HENRY A. BERNARD, ET UX. , RECORDED MAY 22, 1953 IN. BOOK 711, PAGE 62 OF OFFICIAL RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY; THENCE ALONG SAID NORTHERLY LINE, SOUTH 820 17 ' EAST 182 . 52 FEET TO THE NORTHEASTERLY CORNER OF SAID LAND OF BERNARD; THENCE ALONG THE EASTERLY LINE OF SAID LAND OF BERNARD AS FOLLOWS: FROM A TANGENT LINE BEARING SOUTH 190 56 ' WEST, SOUTHERLY ALONG A CURVE CONCAVE EASTERLY HAVING A RADIUS OF 175 FEET, THROUGH A CENTRAL ANGLE OF 200 18 ' , AN ARC DISTANCE OF 62 FEET; TANGENT TO SAID CURVE, SOUTH 00 22 ' EAST 28 .40 FEET AND SOUTHWESTERLY ALONG A TANGENT CURVE, CONCAVE NORTHWESTERLY HAVING A RADIUS OF 20 FEET, THROUGH A CENTRAL ANGLE OF 900, AN ARC DISTANCE OF 31 .42 FEET TO THE NORTHERLY LINE OF ORCUTT ROAD, 40 FEET WIDE; THENCE ALONG SAID ORCUTT ROAD, NORTH 890 38 ' EAST 90 FEET TO THE WESTERLY TERMINUS OF THE COURSE RECITED AS HAVING A BEARING AND LENGTH OF SOUTH 890 38 ' WEST, 197 . 00 FEET IN THE DEED TO CHARLES E. FREEMAN AND WIFE, RECORDED MAY 1, 1957, AS INSTRUMENT NO. 6777, IN BOOK 890, PAGE 85 OF OFFICIAL RECORDS, IN THE OFFICE OF THE SAID COUNTY RECORDER; THENCE ALONG THE WESTERLY BOUNDARY OF THE LAND DESCRIBED IN SAID DEED TO FREEMAN AS FOLLOWS : NORTHWESTERLY ALONG A CURVE CONCAVE NORTHEASTERLY HAVING A RADIUS OF 20 FEET, THROUGH A CENTRAL ANGLE OF 900, AN ARC DISTANCE OF 31 . 42 FEET; TANGENT TO SAID CURVE NORTH 00 22 ' WEST 28 . 40 FEET, AND NORTHEASTERLY ALONG A TANGENT CURVE CONCAVE SOUTHEASTERLY HAVING A RADIUS OF 175 FEET . THROUGH A CENTRAL ANGLE OF 310, AN ARC DISTANCE OF 67 . 63 FEET; THENCE NORTHEASTERLY IN A DIRECT LINE TO THE MOST SOUTHERLY CORNER OF LOT 7 IN BLOCK A OF TRACT NO. 208, AS SHOWN ON MAP RECORDED IN BOOK 60 PAGE 49 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY; THENCE ALONG THE SOUTHWESTERLY LINE OF SAID BLOCK A, NORTH 590 20 ' WEST 312 . 70 FEET TO THE MOST WESTERLY CORNER OF LOT 43 IN SAID BLOCK A; THENCE SOUTH 300 40 ' WEST 90 . 69 FEET TO THE TRUE POINT OF BEGINNING. EXHIBIT "A" �' lQ ATTACHMENT 21 (CONT) .,Pt y WI/4 C ek 1 �AL) 0 . p f2 ©i (b"eq, I N e.�o O,p / o r •r� Q S � l.42 � r/ ` N . C RC Q . j f� 'r-. 4•X'7 � � r 1 / t �• I �y�� I Cp RD. HO. 34 Pt Vacant of 04-961-47 Jan lU1S 0131s00 Laurel & Orcutt Department of Community Development public Works 990 Palm Street/Poet Office Box 321,San Luis Obispo,CA 83408 QATA►MMT NIlyl e � STATE OF CALIFORNIA CALIFORNIA TAX CREDIT ALLOCATION COMMITTEE r 915 CAPITOL MALL, ROOM 485 '0.BOX 942809 1 .CRAMENTO, CA 94209.0001 ELEPHONE: (916)654-6340 FAX: (916)654-6033 MEMBERS: Executive Director Kathleen Brown,Chairperson Ronne Thielen State Treasurer November 2 , 1992 Thomas W.Hayes Director of Finance Gray Davis State Controller Tim Coyle Patrick Sabelhaus Karney Hodge Law Offices of Patrick R. Sabelhaus Leon Hunter 1130 K Street, Suite LL-12 Sacramento, CA 95814 RE: CA-92-204B / Laurel Creek Apartments Dear Mr. Sabelhaus: On November 2, the Tax Credit Allocation Committee (TCAC) approved the making of a reservation offer to the above cited project. Before deciding whether to accept the offer, please consider the conditions in the enclosed documents very carefully. Should you determine that you will be able to meet all of the conditions, you must execute the reservation letter and return the original, along with the specified fees in the form of a certified check, to TCAC by November 23rd. Additionally, please carefully read the information below. EXECUTION OF CARRYOVER ALLOCATION DOCUMENT As specified in your Preliminary Reservation letter, by December 11, you must complete, execute and submit the enclosed Carryover Allocation agreement, including Exhibit A. Exhibit B is to be executed only if you wish to irrevocably elect to establish the tax credit rate for the month the Carryover Allocation agreement is filed. Remember that the Carryover Allocation must be in the name of the entity that incurs the cost. COSTS INCURRED In completing the cost certification form (Exhibit A to the Carryover Allocation document) , you must show that more than 10$ of the reasonably expected total cost of the project has been incurred, specifying by line item which costs they are. Unlike last year, you must have incurred the costs by December it rather than stating that you will incur them by the end of the year. The IRS expects allocating agencies to accept certifications only after costs have been incurred. The certification can be made by the sponsor and does not have to be done by a third party (unless the IRS notifies us otherwise before year-end) . You should consult with a tax professional to be sure that you have actually incurred the costs you are claiming and that they are includable. ATTACHMENT 3 ELECTION TO SET THE RATE Exhibit B of the Carryover Allocation document allows you to elect to irrevocably establish the tax credit rate(s) for the month the carryover is filed. The following chart illustrates how the rates have fluctuated over the past several months. Month Year 70% PVC 30% PVC March 192 8 .68 3 .72 April 192 8 .75 3 .75 May 192 8 .77 3 .76 June 192 8. 76 3 .75 July 192 8.72 3 .74 August 192 8 . 65 3.71 September 192 8 . 55 3 . 66 October 192 8 . 50 3 . 64 November 192 8 .49 3 . 64 Should you choose not to elect to fix the applicable percentage rate, the applicable rate will be the one published for the month each building is placed in service. If you will be executing the Carryover Allocation agreement in December and if you wish to elect the rate, call TCAC and ask what the rate is for December. The rate is published monthly by the IRS and is generally available the week before the end of the preceding month. LAND PURCHASE/LEASEHOLD In addition, you must by December 11 submit proof that you have either purchased the land or entered into a leasehold agreement by December 11. If you will be unable to meet any of the above' requirements, please notify us as soon as possible so we can allocate the credits to a project on the waiting list that can comply by the end of the year. Failure to allocate all credits may make us ineligible to participate in the national pool next year. Best of luck and let us know if you have any questions about these requirements. Sinc el , RONNE THIELEN Executive Director