STAFF REPORT
City of Lancaster
Lancaster Housing Authority
Date: March 26, 2024
To: Mayor Parris and City Council Members
Mayor Parris and Housing Authority Members
From: Larissa De La Cruz, Director - Community Development Chenin Dow, Assistant Director - CD Housing & Economic Development Subject: First Amendment, Partial Assignment and Assumption Agreement, and Subordination Agreement in Connection with Disposition and Development Agreement with Ravello Holdings, Inc.
Recommendations:
That the City Council:
1. Approve a First Amendment to the Disposition and Development Agreement (DDA) with Ravello Holdings, Inc. (“Developer”) in substantially the form submitted hereto for the sale and subsequent development of vacant parcels between Whit Carter Park and Avenue H and south of Avenue H-8 between Sierra Highway and Cedar Avenue (APNs 3135-001-900-919, 3135-005-901, - 904-914, 3135-006-900, -901, -903, -905-923, 3135-025-986, -987).
2. Approve a Partial Assignment and Assumption Agreement, in a form to be approved by the City Attorney, in order to allow Developer to assign certain rights and responsibilities under the DDA to Maison’s Sierra Phase 1, LP.
3. Approve a Subordination Agreement, in a form to be approved by the City Attorney, in order to enable Developer to obtain construction financing.
4. Authorize the City Manager, or his designee, to negotiate, finalize, and execute all documents necessary or appropriate to complete the transaction, in a form to be approved by the City Attorney.
That the Lancaster Housing Authority:
1. Approve a First Amendment to the Disposition and Development Agreement (DDA) with Ravello Holdings, Inc. (“Developer”) in substantially the form submitted hereto for the sale and subsequent development of vacant parcels between Whit Carter Park and Avenue H and south of Avenue H-8 between Sierra Highway and Cedar Avenue (APNs 3135-001-900-919, 3135-005-901, - 904-914, 3135-006-900, -901, -903, -905-923, 3135-025-986, -987).
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2. Approve a Partial Assignment and Assumption Agreement, in a form to be approved by the City Attorney, in order to allow Developer to assign certain rights and responsibilities under the DDA to Maison’s Sierra Phase 1, LP.
3. Approve a Subordination Agreement, in a form to be approved by the City Attorney, in order to enable Developer to obtain construction financing.
4. Authorize the Executive Director, or his designee, to negotiate, finalize, and execute all documents necessary or appropriate to complete the transaction, in a form to be approved by the City Attorney.
Fiscal Impact:
The First Amendment to the DDA will reduce the purchase price of the property by $89,762.94, for a total purchase price of $5,762,749.57. There is no fiscal impact associated with the Partial Assignment and Assumption Agreement or the Subordination Agreement.
Background:
On March 14, 2023, the Housing Authority members approved an Exclusive Negotiating Agreement with Ravello Holdings, Inc. On May 9, 2023, the City Council and the Lancaster Housing Authority authorized the execution of a Disposition and Development Agreement (DDA) with Ravello Holdings, Inc. for the purchase and subsequent development of vacant parcels between Whit Carter Park and Avenue H and south of Avenue H-8 between Sierra Highway and Cedar Avenue (3135-001-900-919, 3135-005-901, -904-914, 3135-006-900, -901, -903, -905-923, 3135-025-986, -987). The 60-acre project has been broken down into three phases, consisting of a total of 450-499 affordable housing units.
On December 12, 2024, the City Council and the Lancaster Housing Authority approved a First Amendment to the DDA. This amendment was not executed, with the terms instead incorporated into the currently proposed First Amendment.
The proposed First Amendment (“Amendment”) would reduce the Purchase Price of the Phase 1 Parcel by Forty Thousand Dollars ($40,000.00) in order to compensate and reimburse the Developer for certain work needed to clear title exceptions and/or otherwise put title in a condition acceptable to the Developer. It would reduce the Purchase Price by an additional $49,762.94 to provide for additional parking for Whit Carter Park, yielding a total adjusted Purchase Price of $5,762,749.57.
Additionally, the Amendment would ensure that all definitions of affordability within the DDA are consistent with those of the California Tax Credit Allocation Committee (TCAC), thus ensuring the financial viability of the project. All other terms in the DDA remain in full force as written.
The proposed Partial Assignment and Assumption Agreement of Disposition and Development Agreement will allow the Developer to assign certain rights and responsibilities under the DDA from Ravello Holdings, Inc. to Maison’s Sierra Phase 1, LP, a limited partnership in which Developer holds majority control. All responsibilities under the DDA will remain in full force as written.
Additionally, the proposed Subordination Agreement will subordinate the Lancaster Housing 1 5
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Authority’s position in the property to the Developer’s construction lender. This is a standard agreement for Housing Authority projects, and is necessary to enable the Developer to obtain financing to develop the project.
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Attachment:
First Amendment to Disposition and Development Agreement with Ravello Holdings, Inc.