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1 FIRST AMENDMENT TO
DISPOSITION AND DEVELOPMENT AGREEMENT
This First Amendment to Disposition and Development Agreement (the “Amendment”), is made and entered into as of February 1, 2025, by and between Fontana Housing Authority, a public body, corporate and politic (the “Authority”), the City of Fontana, California, a municipal corporation (the “City”), and Fontana Courtplace I Housing Partners, L.P., a California limited partnership (the “Partnership”). The Authority, the City, and the Partnership are collectively the “Parties.” The Parties have entered into this Amendment with reference to the following:
R E C I T A L S:
A. WHEREAS, the Parties entered into that certain Disposition and Development Agreement dated November 15, 2023 (the “Original Agreement”); and B. WHEREAS, the Parties desire to amend the Original Agreement as set forth in this Amendment.
A G R E E M E N T:
1. Original Agreement. Except as amended hereby, the Original Agreement remains unmodified and in full force and effect. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Original Agreement.
2. Authority Subordinate Loan. The definition of “Authority Subordinate Loan” in Section
1.1.3 and the amount of the Authority Subordinate Loan referenced in Section 11.1.2 of the Original Agreement are hereby amended to replace the amount provided therein with a loan amount consisting of Seven Million Two Hundred Sixty Two Thousand Three Hundred Seven Dollars and Eighty-Four Cents ($7,262,307.84) of gap financing.
3. Financing Commitments. Notwithstanding anything to the contrary contained in Section 6.4 of the Original Agreement, the Partnership shall have the right to apply for two rounds of 9% Tax Credits in 2025, provided, however, any such applications shall be submitted no later than December 31, 2025. After submission of the foregoing two rounds of 9% Tax Credits, if the Partnership has not been awarded credits, the Partnership, City Manager and Executive Director may meet and confer to discuss alternative financing options for the project, which may, at the City Manager and Executive Director’s sole discretion, include pursuit of a bond allocation from the California Debt Limit Allocation Committee or a subsequent application for 4% Tax Credits. If efforts to obtain Tax Credits during the permitted successive rounds of 9% Tax Credit, or approved alternative, applications are not successful for any reason, the City Manager or Executive Director may terminate the Original Agreement by providing 30 days written notice to the Partnership as set forth in Section 6.4 thereof.
4. Authority Funding Sources. Section 11.3 of the Original Agreement is hereby deleted in its entirety and is replaced with the following:
“11.3 Authority Funding Sources. The Authority has identified the following funding sources to be applied to this Project, with a sum of Seven Million Two Hundred Sixty Two Thousand Three Hundred Seven Dollars and Eighty-Four Cents ($7,262,307.84):
(A) Low/Mod Asset Funds: $1,678,959.21
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2 (B) AB 1486 (Surplus Land) Funds: $3,583,348.63
(C) General Funds: $2,000,000.00”
5. Preliminary Project Budget. The Preliminary Project Budget attached as Exhibit D to the Original Agreement is hereby deleted in its entirety and replaced with the budget attached hereto as Schedule 1.
6. Applicable Law. This Amendment shall be construed and enforced in accordance with the laws of the State of California.
7. Counterparts. This Amendment may be executed in several counterparts, each of which shall be deemed to be an original copy and all of which together shall constitute one agreement binding on all Parties hereto, notwithstanding that all the Parties shall not have signed the same counterpart.
8. Severability of Provisions. Each provision of this Amendment shall be considered severable, and if for any reason any provision which is not essential to the effectuation of the basic purposes of this Amendment is determined to be invalid and contrary to any existing or future law, such invalidity shall not impair the operation of or affect those provisions of this Amendment which are valid.
9. Amendment Binding. This Amendment shall be binding upon and inure to the benefit of the heirs, executors, administrators, legal representatives and permitted successors and assigns of the Parties hereto. Except as amended hereby, the Original Agreement remains unchanged and in full force and effect and the Parties hereto hereby ratify and reaffirm the terms of the Original Agreement as amended hereby.
10. Effective Date. This Amendment is dated February 1, 2025, for reference purposes only. This Amendment shall not become effective until the date on which all of the following are true:
(a) this Amendment is approved and executed by the appropriate authorities of the Partnership; (b) following all legally required notices and hearings, this Amendment is approved by the City Council and the Authority Board; and (c) this Amendment is executed by the City Manager and the Executive Director.
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3 IN WITNESS WHEREOF , the Parties have duly executed this Agreement by their duly authorized signatories effective on or as of the date written at the commencement of this Agreement.
AUTHORITY:
FONTANA HOUSING AUTHORITY,
a public body, corporate and politic
By: ___________________________________
Matthew C. Ballantyne, Executive Director
Attest By:
By: _________________________
Germaine Key, Authority Clerk
CITY
CITY OF FONTANA, CA
a California municipal corporation
By: __________________________________
Matthew C. Ballantyne, City Manager
Attest By:
By: _________________________
Germaine Key, City Clerk
Approved as to form:
Best, Best & Krieger, LLP
By: _________________________
Ruben Duran, Esq.
City Attorney
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1 FONTANA COURTPLACE I HOUSING PARTNERS, L.P.,
a California limited partnership
By: Related/Fontana Courtplace I Development Co., LLC,
a California limited liability company, its administrative general partner By: ________________________________
Frank Cardone, President
By: FFAH V Fontana Courtplace I, LLC,
a California limited liability company,
its managing general partner
By: Foundation for Affordable Housing V, Inc.,
a California nonprofit public benefit corporation, its managing general partner
By: _________________________________
Melissa Vincent, Vice President
By: LBI Southridge Fontana LLC,
a California limited liability company, its co-general partner By: LaBarge Industries, LLC,
a Delaware limited liability company, its sole member
By: ________________________________
Josh LaBarge, President
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1 Schedule 1
Exhibit D – Preliminary Project Budget
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50 units
Budget
ACQUISITION COSTS
Purchase Price 2,800,000$
TOTAL ACQUISITION COSTS 2,800,000$
PROFESSIONAL FEES
Architecture & Engineering 1,892,786$
Other Professional / Consulting 807,214$
TOTAL PROFESSIONAL FEES 2,700,000$
FEES AND PERMITS
City/County Fees and Permits 1,899,625$
Utility Fees/Costs 600,375$
TOTAL FEES AND PERMITS 2,500,000$
CONSTRUCTION COSTS
Offsite Improvements 619,575$
Site Improvements 4,573,415$
Residential Structures (Community Building Included) 12,491,699$ Contractor Contingency 375,054$
General Conditions 1,554,132$
Contractor Profit 967,387$
Contractor Insurance 219,969$
Construction Contingency 1,040,062$
Construction Management 215,000$
TOTAL CONSTRUCTION COSTS 22,056,293$
FINANCING COSTS
Gap Loan Costs 25,000$
Construction Loan Costs 150,000$
Construction Loan Fees 168,000$
Construction Period Interest 875,000$
Post-Construction Interest 640,000$
Permanent Loan Costs 50,000$
Permanent Loan Fees 13,000$
TCAC Fees 112,000$
Misc. Finance Costs 50,000$
TOTAL FINANCING COSTS 2,083,000$
OTHER COSTS
Furnishings, Fixtures & Equipment 300,000$
Marketing Costs 185,000$
Legal Fees 300,000$
Soft Cost Contingency 100,000$
Accounting / Audit / Insurance 430,000$
Developer Fees 2,500,000$
Other Costs / Reserves 135,075$
TOTAL OTHER COSTS 3,950,075$
TOTAL DEVELOPMENT COSTS 36,089,367$
EXHIBIT "D"
PRELIMINARY PROJECT BUDGET
50 Units
Budget
RENTING
Advertising 245$
Misc. Renting 2,000$
TOTAL RENTING 2,245$
ADMINISTRATION
Office 2,720$
Legal 2,076$
Audit 15,785$
Telephone/Computer 11,565$
Tenant Relations 644$
Misc. Administrative 6,997$
TOTAL ADMINISTRATION 39,787$
MANAGEMENT FEE
Contract Management 42,000$
TOTAL MANAGEMENT 42,000$
OPERATING
Electricity 429$
Water 23,724$
Gas -$
Sewer 17,851$
Exterminating 866$
Rubbish Removal 12,180$
Misc. Operating 5,882$
TOTAL OPERATING 60,932$
MAINTENANCE
Security 11,402$
Grounds 12,026$
Repairs 2,213$
Elevator -$
Misc. Maintenance 16,684$
TOTAL MAINTENANCE 42,325$
SALARIES AND BENEFITS
Office Salaries 62,400$
Maintenance Salaries 58,240$
Payroll Taxes and Benefits 26,495$
TOTAL SALARIES AND BENEFITS 147,135$
TAXES AND INSURANCE
Real Estate Taxes 1,500$
Business Taxes and Licenses 1,276$
Insurance 50,000$
TOTAL TAXES AND INSURANCE 52,776$
RESERVES AND OTHER EXPENSES
Replacement Reserves 15,000$
Social Programs 22,800$
TOTAL RESERVES AND OTHER COSTS 37,800$
TOTAL OPERATING EXPENSES 425,000$
EXHIBIT "D"
PRELIMINARY OPERATING EXPENSES
Construction Sources and Uses
Construction Sources
Construction Loan 16,713,456$
Tax Credit Equity 1,869,837$
Residual Receipts Loan (Fontana Housing Authority) 7,262,308$ Residual Receipts Loan (City of Fontana) 6,037,692$
Land Acquisition Loan (City of Fontana) 2,800,000$
Deferred Developer Fee 1,250,000$
Deferred Operating Deficit Reserve 135,075$
Deferred TCAC Monitoring Fees 21,000$
Total Construction Sources 36,089,367$
Construction Uses
Total Development Cost 36,089,367$
Amount Over/(Under) -$
Permanent Sources and Uses
Permanent Sources
Tax Credit Equity 18,698,367$
Permanent Financing 1,291,000$
Residual Receipts Loan (Fontana Housing Authority) 7,262,308$ Residual Receipts Loan (City of Fontana) 6,037,692$
Land Acquisition Loan (City of Fontana) 2,800,000$
Total Permanent Sources 36,089,367$
Uses
Total Development Cost 36,089,367$
Amount Over/(Under) -$
EXHIBIT "D"
SOURCES AND USES OF FUNDS
Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
INCOME
Gross Rental Income 589,476 607,160 625,375 644,136 663,460 683,364 703,865 724,981 746,731 769,132 792,206 815,973 840,452 865,665 891,635 Laundry Income 3,600 3,708 3,819 3,934 4,052 4,173 4,299 4,428 4,560 4,697 4,838 4,983 5,133 5,287 5,445 Vacancy @ 5.0% (29,654) (30,543) (31,460) (32,404) (33,376) (34,377) (35,408) (36,470) (37,565) (38,691) (39,852) (41,048) (42,279) (43,548) (44,854) EFFECTIVE GROSS INCOME 563,422 580,325 597,735 615,667 634,137 653,161 672,756 692,938 713,726 735,138 757,192 779,908 803,305 827,404 852,227
EXPENSES
Administrative (39,787) (40,981) (42,210) (43,477) (44,781) (46,124) (47,508) (48,933) (50,401) (51,913) (53,471) (55,075) (56,727) (58,429) (60,182) Management Fee (42,000) (43,260) (44,558) (45,895) (47,271) (48,690) (50,150) (51,655) (53,204) (54,800) (56,444) (58,138) (59,882) (61,678) (63,529) Operating (60,932) (62,760) (64,642) (66,582) (68,579) (70,637) (72,756) (74,938) (77,186) (79,502) (81,887) (84,344) (86,874) (89,480) (92,165) Maintenance (42,325) (43,595) (44,903) (46,250) (47,637) (49,066) (50,538) (52,054) (53,616) (55,225) (56,881) (58,588) (60,345) (62,156) (64,020) Salaries (147,135) (151,549) (156,095) (160,778) (165,601) (170,569) (175,686) (180,957) (186,386) (191,977) (197,736) (203,669) (209,779) (216,072) (222,554) Taxes (escalated at 2.00%) (2,776) (2,832) (2,889) (2,946) (3,005) (3,065) (3,127) (3,189) (3,253) (3,318) (3,385) (3,452) (3,521) (3,592) (3,664) Insurance (50,000) (51,500) (53,045) (54,636) (56,275) (57,964) (59,703) (61,494) (63,339) (65,239) (67,196) (69,212) (71,288) (73,427) (75,629) Renting (2,245) (2,312) (2,382) (2,453) (2,527) (2,603) (2,681) (2,761) (2,844) (2,929) (3,017) (3,108) (3,201) (3,297) (3,396) Social Programs (22,800) (23,484) (24,189) (24,914) (25,662) (26,431) (27,224) (28,041) (28,882) (29,749) (30,641) (31,561) (32,507) (33,483) (34,487) Replacement Reserves (15,000) (15,000) (15,000) (15,000) (15,000) (16,500) (16,500) (16,500) (16,500) (16,500) (18,150) (18,150) (18,150) (18,150) (18,150) TOTAL OPERATING EXPENSES (425,000) (437,272) (449,912) (462,931) (476,339) (491,649) (505,873) (520,523) (535,612) (551,152) (568,809) (585,295) (602,275) (619,763) (637,776) NET OPERATING INCOME 138,422 143,053 147,823 152,736 157,798 161,512 166,883 172,415 178,115 183,986 188,383 194,613 201,031 207,641 214,451 EXHIBIT "D"
15 YEAR CASH FLOW PROJECTIONS