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HomeMy WebLinkAboutResolution 2014-096 N.C.S. 6/16/2014Resolution No. 2014-096 N.C.S. of the City of Petaluma, California APPROVING THE SUBORDINATION OF FINANCING AND REGULATORY AGREEMENTS FOR THE LOGAN PLACE APARTMENTS AFFORDABLE HOUSING DEVELOPMENT RATIFYING THE PROJECT FINANCING PROVIDED BY THE CITY OF PETALUMA AND THE FORMER PETALUMA COMMUNITY DEVELOPMENT COMMISSION WHEREAS, pursuant to Resolution No. 2012-007, adopted by the City Council on January 9, 2012, the City of Petaluma ("City") agreed to serve as the successor agency ("Successor Agency") to the Petaluma Community Development Commission ("PCDC") commencing upon the dissolution of PCDC on February 1, 2012 pursuant to Assembly Bill xl 26; and, WHEREAS, pursuant to Resolution No. 2012-009, adopted by the City Council on January 23, 2012, in accordance with Health and Safety Code Section 34176, the City elected to retain the housing assets and housing ftmetions previously performed by PCDC, and elected to assrune such housing assets and functions commencing upon dissolution of PCDC; and, WHEREAS, the City and PCDC have provided financing to Burbank Housing Development Corporation, a California nonprofit public benefit corporation (`Burbank") and to Burbank's successor in interest, Logan Place, L.P., a California limited partnership ("Developer"), to assist in the development of an affordable housing project consisting of 66 units of multifamily housing (the "Project") located at 1200 Petaluma Boulevard North (the "Property"); and, WHEREAS, Burbank conveyed the Property to Developer, and Burbank continues to serve as Developer's administrative general partner; and, WHEREAS, the City and PCDC financing for the Project consists of the following (collectively, the "Loans"): (i) a loan in the principal amount of One Million Dollars ($1,000,000), evidenced by a promissory note dated March 5, 2008, executed by Burbank for the benefit of PCDC, and secured by a deed of trust executed by Burbank for the benefit of PCDC and recorded in the Official Records of Sonoma County ("Official Records") on March 17, 2008 as Instrument No. 2008-024306 (the "Deed of Trust"); (ii) a loan in the principal amount of One Million Three Hundred Thousand Dollars ($1,300,000), evidenced by a promissory note dated October 1, 2008, executed by Burbank for the benefit of PCDC; and, (iii) a loan in the principal amount of One Million, Three Hundred Fifty Thousand Dollars ($1,350,000) evidenced by a promissory note dated May 1, 2012, executed by Developer for the benefit of City; and, WHEREAS, pursuant to that certain Assignment and Assumption of City Loans dated as of May 1, 2012, executed by and among Burbank, Developer and City, and recorded in the Official Records on May 24, 2012 as Instrument No. 2012-049567, the Developer assumed all of Burbank's rights and obligations under the Loans, including without limitation, Burbank's payment obligations under the promissory notes evidencing the Loans and Burbank's performance obligations under the Deed of Trust; and, Resolution No. 2014-096 N.C.S. Page I WHEREAS, pursuant to that certain Modification to Deed of Trust dated as of May 1, 2012, executed by and among Burbank, Developer and the City in its capacity as the successor in interest to PCDC, and recorded in the Official Records on May 24, 2012 as Instrument No. 2012- 049566, the Deed of Trust was modified to explicitly provide that all of the Loans are secured by the Deed of Trust; and, WHEREAS, pursuant to an Affordable Housing Regulatory Agreement and Declaration of Restricted Covenants dated as of May 1, 2012, and executed by and between the City and the Developer, and recorded in the Official Records on May 24, 2012 as Instrument No. 2012049575 (the "City Regulatory Agreement"), the Developer agreed to limit occupancy of the Project to Eligible Households at Affordable Rent (as defined in the Regulatory Agreement); and, WHEREAS, the City provided additional financing for the Project, consisting of a loan in the amount of Four Million Dollars ($4,000,000) funded with Home Investment Partnership ("HOME") funds (the "HOME Loan"), evidenced by a promissory note dated May 1, 2012 executed by Developer for the benefit of City, and secured by a deed of trust executed by Developer for the benefit of City and recorded in the Official Records on May 24, 2012 as Instrument No. 2002-049574 (the "HOME Deed of Trust"); and, WHEREAS, in connection with the HOME Loan, Developer and City executed that certain Regulatory Agreement dated as of May 1, 2012 and recorded in the Official Records on May 24, 2012 as Instrument No. 2012-049573 (the "HOME Regulatory Agreement"); and, WHEREAS, Silicon Valley Bank ("Construction Lender") provided construction financing for the Project, and in connection therewith, the City and PCDC agreed to subordinate the Deed of Trust, the City Regulatory Agreement, the HOME Deed of Trust, and the HOME Regulatory Agreement to Construction Lender's deed of trust; and, WHEREAS, the California Department of Housing and Community Development ("HCD") has agreed to provide a constriction loan to Developer for the Project in the amount of Six Million, Eighty -Two Thousand and Forty -Two Dollars ($6,082,042) (the "MHP Loan") using funds from HCD's Multifamily Housing Program (`MHP"); and, WHEREAS, HCD's commitment to make the MHP Loan is expressly conditioned upon the subordination of the Deed of Trust, the City Regulatory Agreement, the HOME Deed of Trust, the HOME Regulatory Agreement, and all other documents evidencing or securing the Loans or the HOME Loan to the deed of trust and the regulatory agreement to be executed by Developer for the benefit of HCD in connection with the MHP Loan; and, WHEREAS, some of the funding for the Loans was provided using funds from PCDC 's low and moderate -income housing fund established pursuant to Health and Safety Code Section 33334.3; and, WHEREAS, in its capacity as the housing successor to PCDC, the City is required to comply with the housing provisions of Community Redevelopment Law; and, WHEREAS, pursuant to Health and Safety Code Section 33334.14 (a)(4), the City in its capacity as the as the housing successor, is permitted to subordinate the affordability restrictions set forth in the Regulatory Agreement to liens, encumbrances, and regulatory agreements for the benefit of state and federal agencies providing financing; and, Resolution No. 2014-096 N.C.S. Page 2 WHEREAS, the proposed HCD subordination agreements require I -ICD to provide the City with notice and an opportunity to cure defaults under the HCD documents. NOW THEREFORE, BE IT RESOLVED that the City Council of the City of Petaluma hereby: I . Ratifies and affirms the provision of the Loans and the HOME Loan to Burbank and to Developer, and ratifies and affirms the execution and delivery of all documents executed by the City and/or by PCDC in connection with the Loans and/or the HOME Loan. 2. Agrees to subordinate the Deed of Trust, the City Regulatory Agreement, the HOME Deed of Trust, the HOME Regulatory Agreement, and all other documents evidencing or securing the Loans or the HOME Loan to the deed of trust and the regulatory agreement to be executed by Developer for the benefit of HCD in connection with the MHP Loan. 3. Authorizes and directs the City Manager and his designees to take all actions necessary to implement this Resolution, including without limitation the execution, delivery, and recordation of subordination agreements for the benefit of HCD. Under the power and authority conferred upon this Council by the Charter of said City REFERENCE: I hereby certify the foregoing Resolution was introduced and adopted by the /` as to Council of the City of Petaluma at a Regular meeting on the 16°i day of June, 2014, rform: by the following vote: �' City ttomey AYES: Barrett, Mayor Glass, Harris. Healy, Vice Mayor Kearney, Miller NOES: None ABSENT: Albertson ABSTAIN: None ATTEST: City Clerk Mayor Resolution No. 2014-096 N.C.S. Page 3