RESOLUTION NO. 22-9153
A RESOLUTION OF THE CITY OF SANTA CLARA, CALIFORNIA,
APPROVING AN AMENDMENT TO THE LOAN AGREEMENT
BETWEEN THE CITY OF SANTA CLARA AND MONROE STREET
HOUSING PARTNERS, L.P. FOR THE MONROE APARTMENTS
PROJECT LOCATED AT 2330 MONROE STREET, SANTA
CLARA
BE IT RESOLVED BY THE CITY OF SANTA CLARA AS FOLLOWS:
WHEREAS, the Applicant applied for Architectural Review of a 65-unit affordable residential project for low or very-low income residences ("Project"); WHEREAS, on January 28, 2020, the City Council approved a General Plan Amendment, Rezoning, and Mitigated Negative Declaration (MND) and Mitigation Monitoring and Reporting Program (MMRP) for the proposed project at 2330 Monroe Street ("Project Site"); WHEREAS, on February 5, 2020, the Architectural Committee approved the project's application;
WHEREAS, on April 1, 2022, the parties entered into a Loan Agreement in the amount of $6.5 million to provide financial assistance for the development of the project; WHEREAS, the Loan Agreement contemplates that implementation of the Project will require a myriad of permits, approvals, entitlements, agreements, permits to enter, utility services, subdivision maps, building permits, and other authorizations in order to implement the Project, including but not limited to an amendment to the Loan Agreement, Deed of Trust, Promissory Note, Affordable Housing Agreement and Regulatory Agreement (together, the "Project Documents");
WHEREAS, City staff have determined that the City's existing infrastructure would not support the fire suppression demand if a fire were to occur during peak water usage times once the affordable housing development is placed in service, and that a water main upsize for health and safety purposes is required;
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Resolution/Monroe L.C. Amendment #1 to Loan Agreement
Rev: 10/24/22
WHEREAS, the parties desire to amend the original loan agreement to increase the loan amount by up to $3.0 million to support funding the upgrade of approximately 1,860 lineal feet of water main to support the construction of a residential affordable housing project at 2330 Monroe Street;
WHEREAS, the Project Documents, including the amendment to the Loan Agreement, will help address the City's housing needs at a broad range of income levels by providing the City with 65 housing units, of which 100% will be affordable to households with Area Median Income (AMI) levels ranging from 25% to 80% AMI; and,
WHEREAS, on November 1, 2022, the City Council conducted a duly noticed public hearing, at which time all interested persons were invited to provide testimony and evidence, both in support of and in opposition to the proposed amendment to the Loan Agreement.
NOW THEREFORE, BE IT FURTHER RESOLVED BY THE CITY OF SANTA CLARA AS FOLLOWS:
1. That the City Council hereby finds that the above Recitals are true and correct and by this reference makes them a part hereof.
2. That the City Council hereby approves and authorizes the City Manager to execute the amendment to the Loan Agreement, substantially in the form attached hereto as Exhibit "Term Sheet for Amendment #1 to Loan Agreement," subject to such minor and clarifying changes consistent with the terms thereof as may be approved by the City Attorney prior to execution thereof.
3. That this Resolution, including Amendment #1 to the Loan Agreement approval described in Section 2 above, is based on the findings set forth above.
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II
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Resolution/Monroe L.C. Amendment #1 to Loan Agreement
Rev: 10/24/22
4. That the City Manager and/or designee is hereby authorized and directed to perform all acts to be performed by the City in the administration of Amendment #1 to the Loan Agreement pursuant to the terms of the negotiated Term-sheet. The City Manager is further authorized and directed to perform all other acts, negotiate and execute all documents (including deeds of trust, promissory notes, and affordable housing agreement) necessary or convenient to close escrow and carry out the purposes of this Resolution and the Amendment to the Loan Agreement.
5. Effective date. This resolution shall become effective immediately.
I HEREBY CERTIFY THE FOREGOING TO BE A TRUE COPY OF A RESOLUTION PASSED
AND ADOPTED BY THE CITY OF SANTA CLARA, CALIFORNIA, AT A REGULAR MEETING THEREOF HELD ON THE 15TH DAY OF NOVEMBER, 2022, BY THE FOLLOWING VOTE:
AYES: COUNCILORS: Becker, Chahal, Hardy, Jain, Park, Watanabe and Mayor Gillmor
NOES: COUNCILORS:
ABSENT: COUNCILORS:
ABSTAINED: COUNCILORS:
Attachments incorporated by reference:
None
None
None
ATTEST: ~
NORA PIMENTEL, MMC
ASSISTANT CITY CLERK
CITY OF SANTA CLARA
1. Term Sheet for the Increase to the City Loan Amount for the Water Main Upgrade Resolution/Monroe L.C. Amendment #1 to Loan Agreement
Rev: 10/24/22
City of
Santa Clara
The OettwrofWltllt'& PoHllllfl
MONROE STREET APARTMENTS
TERM SHEET FOR THE INCREASE TO THE CITY°LOAN AMOUNT FOR THE WATER MAIN
UPGRADE
Date: November I, 2022
4. SELLER LOAN. On April 1, 2022, the City made a $5,200,000 loan to the Borrower as evidenced by a promissory note, secured by a deed of trust and n loan agreement ("Seller Loan"), the proceeds of which were used to prepay in advance the City's lease payments pursuant to a 65~year ground lease between the City as the landlord and the Borrower as the lessee. The Seller Loan bears no interest during construction and 0.5% simple interest commencing at Completion for a term of 55 years from Conversion. The City will receive Net Cash Flow payments commencing on the Conversion Date. ·
Community Devolopmqnt Daparlanflnt, Housing & Community Services Division lliO0 Wnr})ttrton Avenue ~ Snnta Ole.ra, CA 015050 • Phone: 408-6l!Hl280 • Fax: 408-249-7846 • www.SantaOlaraOA.gov L.
(Attachment 2) Term Sheet -Monroe Water Main Upgrada
Page2 of7
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5. SPONSOR: Freebird Development Company, LLC, a California limited liability company
6. BOND FINANCING AND CONS'.1],UC1:ION AND PERMAflBNT FINANCING: The City Loan and the Seller Loan form a part of the financial structure used to acquire and develop the Project. The construction and perJ:1!Ril!)Ut financing for the development of the Project includes the syndioation of the Pt·operty ~tilizing tax-exempt bond per.111;anent financing, 4% Low Income Housing Tax Credits ("LllITC") tax credit equity, a loan from the County of Santa Clara and a loan from California Housing Finance Agency Mixed-Income Program ("CalHF A MIP").
7. AMENDED AND RESTATED CITY LOAN; The r~vised City Loan terms are set forth in Exhibit A "Amendments to the Tel'tl18 and Conditions of:tJle Existing City Loan," attached hereto. The City Loan Documents shall be amended and restated as set forth in Exhibit A. 8, DOCUMENTATION.
a. This Term Sheet is not intended to set all the terms, conditions and documents required by the City for the Transaction, which shall include oustomary provisions and documents to be approved by City (including, but not limited to, all such documents mentioned in this Term Sheet and all City documents evidencing, securing, or related to City documents related to this Project, shall In all respects be satisfactory to City. . . \" .. . · ..
b. · Borrower sha1t'promptly deliver to City any further documentation which may be required by City.
c, Expiration: The subject Term Sheet explres 10 days from the date written above. Please return a fully executed copy.Jo the qity by November 11, 2022. ''
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(A}tac~m~1it ;2) Term. Sheet ~Monro~ Water Main Upgriidc Page r1 of7 .
ACCEPT~P BY:
Monroe Street Rouslng Partners, L.P.1 a California
limited parhiers'Iiip ·
By:
By:
AHA Norcal MGP LLC,
a California limited liability company
its managing general pa1tner
Affordable Housing Access, lnc,,
a California nonprofit pubiic benefit
corporation .
itsm.~a:gerii :.
. ., . t ./ /"/ l L
By: . tf4,~e .. ~
Na1ne VA-~ n ... 105 ~1.;r,+,vi(.);,-,,t>~.S:
Title:
]reebµ-d Jvipqrpe LLG,
a California limited liability compimy
its administrative general pariner
By: fr~ebfltiP,evelopment ¢9)tiJ5any LLC
a CaUfor.riia limited liability company
its sole member n1anager ·
. . ~ ..
Name: _R_-o_b_:i_n_Z_im_.b_J_e_r __ _
Titie: Manager
I
,.
I
(Attnchment 2) Term Sheet-Monroe Water Main Upgrnde
Page4 of7
ACKNOWLEDGED BY:
The C~ity of Santa Clara, ~a California municipal ~ poration By: r.Lt/./ ~ --L~ : ~ evBatra (j
0 • ~i~;~: City Manager
Date: November 11, 2022
APPROVED AS TO FORM:
SANTrrA CITY ATTORNEY'S OFFICE
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(Attachment 2) Term Sheet ~Monroe Water Main Upgrade
Pages of7
EXHffiIT A
AMENDED TERMS AND CONDITIONS TO'Tim EXISTING CITY LOAN
1. LOAN AMOUNT: Up to $9,500,000 ("Amended Ctt.y Loan").
2. SOURCE: The Loan increase is funded by the City Affordable Housing Fund is not an obligation of City's General Fund.
3. LOAN MATURITY DATE: No change.
4. INTEREST RATE: No change.
5. PROPERTY OWNERSHIP: No change.
6. ASSIGNMENTS OF CONTRACTS AND AGREEMENTS: 'The Borrower will also enter Into an Assignment of the Plans and Specifications and Civil Engineer Agreement and Assignment of the Construction Contract The Assignment of the Construction Contract, Assignment of the Civil Engineer Agreement and Assignment of the Plans and Specifications, once acceptable to the City, will be subordinated to the senior construction and permanent loans.
7. RESIDUAL RECEIPT SHARE: City's proportionate share of residual receipts shall be adjusted based on the Amended City Loan amount.
8. PROJECT PROFORMA: Prior to the close of the Transaction, Borrower shall submit to City, and City wilt approve, an updated pro forma budget reflecting Borrower's projection of the construotlon/pe1·manent budget sources and uses of funds and income and operating expense cash flow for the Project.
9. ORGANIZATIONAL AGREEMENTS: Borrower shall submit to City borrowing resolutions and such related documentation as City may request.
10, CONSTRUCTION COMPLETION: No change.
11. PLANS AND SPECIFICATIONS: Final plans and specifications for the Water Main Upgrade shall be subject to City's approval prior to close of the Transaction. Any changes to the plans and specifications that are approved shall be governed by the City Loan Documents. 12, CIVIL ENGINEER'S AGREEMEN:r: The civil engineer's agreement for the preparation of the plans and specifications and other services shall be subject to City's approval. There shall be no material changes in the plans and specifications, nor any material deviation in construction of the Water Main Upgrade without City's prior written consent. City may require an assignment of Borrower's interest in and to the agreement as security for the Loan.
13. :PREVAILING WAGE REQUIREMENTS. No change.
14. CONSTRUCTION CONTINGENCY: Borrower's bard cost construction contingency related to the Water Main Upgrade shall not be less than 7%, excluding the contractor's overhead, profit and ' . -
(Attaoh1nent 2) Term Sheet-Monroe Wnter Main Upgrade
Page6 of7
general conditions and including insuranc~. The constr1:1ction contingency related to the Water Main Upgrade shall only be used for the Water Main Upgrade and shall accounted for separate from any other contingency with respect to t~e Pr~ject. 1 S. CONSTRUCTION CONSUL TANT: The City will engage a construction inspector ("Construction Inspector") for the purposes ofreviewing construction documents, monitoring constmction draws, reporting on construction progress and inspecting Water Main Upgrade. Prior to closing on the Transaction, City will ptovide Borrower with the Co.nstructton inspector budget, The cost of the Construction Inspector shall be invoiced to and paid by the Project. The City shall approve all construction draws.
16. CONSTRUCTION CONTRACT: The construction contract ("Contract") and the general contractor ("Contractor"), to be retained by Borrower to construct the Water Main Upgrade, shall all be subject to City's approval. City shall require an assignment of Borrower's interest in and to the Contract as secmity for the City Loan subject to any subordinations of that assignment approved by City. Change Orders will require City approval as provided for in the City Loan Documents.
Borrower shall obtain at least 3 bids for the Contract and provide copies thereof to the City.
17. FORM OF CONSTRUCTION CONTRACT: The contract type used should be Cost Plus a Fee with a Guaranteed Maximqm Price, Conn:act must be in the most recent form provided by the American Institute of Architects ("AIA;,), ·as may be modified by the Borrower but subject to approval by the City. The savings clause in the contract must indicate that 100% of the constructiop. cost savipgs associated with the Water Main Upgrade will be returned to the Borrower.
Construction cost savings calculation shall be received and reviewed by the City prior to the permanent loan closing. If the contractor for the Water Main Upgrade is the same contractor for the Project, then the Contract may be in the form of a change order to the existing contract for the Project, subject to the same conditions and approvals herein and the City Loan Documents.
18. CONSTRUCTION COMPLETION BOND: Performance and payment bonds for the construction contract naming the City as co-obligee shall be required for the contractor, acceptable to the City.
Aii.y surety for purposes of bonding, including, but not limited to, performance or completion bonds, must be a corporation duly authorized and admitted to transact business and issue surety bonds in the State of California, If the contractor for the Wat.er Main Upgrade is the same contractor for the Project, and if the Contract is in the form of a change order to the existing contract for the Project, then City acknowledges that the form of the existing payment and performance bond that was already approved for the Project satisfies this condition, provided that the amount thereof shall be adjusted to reflect the Contract.
19. PROJECT COST SAVINGS: 100% of the cost savings attributable to the Water Main Upgrade, if any, shall be paid to the City on the same schedule as the Project Cost Savings under the City Loan Documents.
20, PISBURSBMENT: The Additional Funds shall be disbursed after Borrower has utilized all other sources of construction financing shown in the updated project pro forma (including, without limitation, any equity and funds from Senior Loans), and shaU be available on a 1nonthly drnw down basis pursuant to commercially standard construction loan terms. City's written approval is required for all existing construction disbursements including disbursements incurred towards the Water Main Upgrade. City shalt require Borrower to provide documentation supporting the request for each disbursement, City reserves the right to condu9t inspections of the Water Main Upgrade ·:
(Attachment 2) Te1-m Sheet ~Monroe Water Main Upgrade
Page7of7
prior to approving disbursements. The Additional Funds shall be used only for the Water Main Upgrade and shall not be used to otherwise finance the Project.
21. TITLE INSURANCE: Borrower shall procure and deliver to the City an endorsement to its ALTA Extended Policy of Title Insurance (or reissuance thereof if such endorsement is not available), together with such other endorsements as City may require, in an amount equal to the amended principal amount of the City Loan, insuring that ·cfty Loan's Deed of Trust constitutes a junior lien or charge upon the Project subject only to such items· as shall have been approved by City, There shall be no exceptioDB permitted for mechanics' liens. Such policy shalJ be issued by Old Republic Title Company, or another title insurer approved by the City. . .
22. CITY EXPENSES: Borrower' shall make prompt payment ofall expenses of City and other parties' incidentals to the Transaction including, without limitation, expenses incurred for third-party expenses, architectural and engineering• reviewi appraisal· or appraisal review, toxie review, inspections, and legal services. Borrower shall also pay closing expenses including, without limitation, escrow fees, title insurance, liability and'other iDBurance and architect's and engineer's fees, as well as charges for such items as surveys, recordation, filing and documentary or stamp taxes, If this Transaction does not close, Borrower shall pay City's reasonable expenses incurred.
The City shall provide a summary of such costs and expenses prior to closing on the Transaction.
23. INDEMNIFICATION: The B·orrower shalf indemnify, hold harmless the City from and against any and all loss, costs, damage, actions and liabilities directly or indirectly 1·esulting from this Transaction, including negative impacts that may arise from prevailing wage, tax credits and bond financing.
24. COMPLIANCE/NO DEFAQLT: Prior to closing, the Borrower must be in compliance with the ongoing construction of the Project with the City, the senior lender, the County, CalHFA and the tax investor (collectively, "Stakeholders") and that the Borrower is not in default under any of the Stakeholders' documents.
25. OTHER REQUIREMENTS: Borrower shall procure and deliver to City evidence satisfactory to City that Borrower has obtained all the necessary consents and approvals from the Stakeholders.
City shall have the right to impose any additional requirements that are commercially reasonable or requil'~ by applicable law of City policy.
All other terms and conditions under the existing City Loan Documents shall remain unchanged,