RESOLUTION NO. 22-9166
A RESOLUTION OF THE CITY OF SANTA CLARA, CALIFORNIA,
AUTHORIZING THE CITY MANAGER TO EXECUTE
AFFORDABLE HOUSING AGREEMENT AND LOAN PROJECT
DOCUMENTS BETWEEN THE CITY OF SANTA CLARA AND
MAINLINE NORTH 701, LP., FOR THE PROJECT LOCATED AT
2310 CALLE DEL MUNDO, SANTA CLARA
BE IT RESOLVED BY THE CITY OF SANTA CLARA AS FOLLOWS:
WHEREAS; ZAEN Partners, LLC ("Developer 1 "), is the project sponsor for three infill, mixed-use projects that would cumulatively include approximately 969 rental apartment units, parking garages, up to 30,000 square feet of retail space, approximately 4,500 square feet of leasing space, and approximately 55,000 square feet of amenity space (collectively, the "ZAEN Tasman East Projects");
WHEREAS; On July 17, 2019, the City approved the first project, known as the "Station Project," which includes 503 residential rental units and approximately 23,870 square feet of retail space located at 5123 Calle Del Sol (Parcels 19/29). The second project proposed by Developer 1 includes 150 residential rental units with approximately 5,000 square feet of retail located at 2302 Calle Del Mundo (the "Parcel 24 Project"); the Parcel 24 Project received architectural control approval on January 15, 2020. The third project proposed by Developer 1 would include 316 residential rental units located at 2263 Calle Del Mundo (the "Parcel 60/61 Project") and is also currently under review by City staff and is expected to hold its public hearing for architectural control approval on October 21, 2020.
WHEREAS; Tasman East Urban Housing, LLC and Tasman East Holdco, LLC ("Developer 2"), is the project sponsor for two infill, mixed-use projects that would cumulatively include approximately 1,409 residential units, 191 home for the ambulatory aged residential units, parking garages, approximately 31,000 square feet of commercial space, and approximately 78,000 square feet of amenity space (collectively, the "Related Tasman East Projects"); fl
Resolution/Mainline North 701, L.P./2310 Calle Del Mundo Rev: 11/22/17
WHEREAS; On December 4, 2019, the City approved the first project, which includes 509 residential units, 191 home for the ambulatory aged units and approximately 31,000 square feet of commercial space located at 5150 Calle Del Sol and 2350 Calle De Luna (the "Developer 2 Phase 1 Project"). The second project proposed by Developer 2 would include approximately 900 residential units located at 2101 Tasman Drive (the "Developer 2 Phase 2 Project"), which may be developed in multiple phases and is currently under review by City staff; WHEREAS; Developer 1 has partnered with USA Multi-family Development, Inc., and TPG Affordable LLC, ("Developer 3), a for-profit developer of affordable housing to implement the affordable housing requirements for the above referenced projects; WHEREAS; Developer 3 intends to develop a 100% affordable housing project on Parcel 24 that includes one hundred fifty-one (151) rental units with the required unit mix of studio, one bedroom and two bedroom units, and consisting of one hundred fifty (150) affordable units one manager's unit (1) and related facilities;
II
II
II
II
II
II
II
II
II
II
II
II
Resolution/Mainline North 701, L.P./2310 Calle Del Mundo Rev: 11/22/17
WHEREAS; thirty of the one-hundred and fifty-one (151) affordable units on the Parcel 24 Site are intended to satisfy the Affordable Housing Requirements for all 969 units associated with the ZAEN Tasman East Projects and fifty-four (54) units of the one-hundred and forty-nine (149) very low income units on the Parcel 24 Site are intended to satisfy the Affordable Housing Requirements for all 1,600 residential units associated with Tasman East Urban Housing, LLC and Tasman East Holdco, LLC Projects. In order to ensure that the affordable units are provided concurrently with the market rate units, the City will not issue any Certificate of Occupancy (Temporary or Final) for the Station Project, the Parcel 60161 Project, or the Related Tasman East Projects until such time as a building permit is issued for the Parcel 24 Project, unless otherwise approved by the City Manager.
Otherwise, Developer 1 and Developer 2 will elect to default to the original conditions of approval (i.e., provide 10% onsite inclusionary units at 100% AMI for the Station Project, the Parcel 60161 Project, and the Related Tasman East Projects or, subject to Community Development Director approval, pay the Affordable Housing Rental Residential Impact Fee as per the City's Municipal Fee Schedule);
WHEREAS, the Loan Agreement will contemplate that implementation of the Project will require a myriad 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 a Loan Agreement, Deed of Trust, Promissory Note, Affordable Housing Agreement and Regulatory Agreement (together, the "Project Documents"); and, WHEREAS, the development of units as contemplated by the Project Documents will help address the City's housing needs at very low and low-income levels by providing the City with one-hundred and fifty (150) affordable units. The distribution of these units shall be sixteen (16) units rented to households with incomes at or below 30% AMI, fifty-eight (58) units rented to households with incomes at or below 50% AMI, seventy-six (76) units rented to households with incomes at or below 70% AMI, and one (1) unrestricted manager's unit.
II
Resolution/Mainline North 701, L.P./2310 Calle Del Mundo Rev: 11/22/17
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.
2. That the City Council hereby approves and authorizes the City Manager to negotiate and execute the Affordable Housing Agreement and Project Documents, consistent with the negotiated Term Sheet, dated December 6, 2022, 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 the Loan Agreement approval described in Section 2 above, is based on the findings set forth above.
II
II
II
II
II
II
II
II
II
II
II
II
II
II
II
II
II
Resolution/Mainline North 701, L.P./2310 Calle Del Mundo Rev: 11/22/17
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 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, amend 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 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 6TH DAY OF DECEMBER, 2022, BY THE FOLLOWING VOTE:
AYES: COUNCILORS :
NOES: COUNCILORS:
ABSENT: COUNCILORS:
ABSTAINED: COUNCILORS:
Attachments incorporated by reference:
1. Affordable Housing Agreement
2. Project Term Sheet 12-6-2022
Becker, Chahal, Hardy, Jain, Park, Watanabe
and Mayor Gillmor
None
None
None
ATTEST: ~
~ c
ASSISTANT CITY CLERK
CITY OF SANTA CLARA
Resolution/Mainline North 701 , L.P./2310 Calle Del Mundo Rev: 11 /22/17
2310 Calle Del Mundo
City of Santa Clara
Housing and Community Services Division
P a g e | 1
2310 Calle Del Mundo
City of Santa Clara Term-sheet
CONSTRUCTION AND PERMANENT LOAN
Date: December 6, 2022
1. PROPERTY AND PLANNED IMPROVEMENTS: The project site is 0.99 acres located at 2310 Calle Del Mundo (APN# 097-46-024) in Santa Clara within the Center District of the adopted Tasman East Specific Plan. The proposed project consists of 151 mixed- income apartment units with approximately 86,520 rentable square feet and approximately 4,750 square feet of general retail/commercial space. There is a mix of studios, 1-bedroom, 2-bedroom, and 3-bedroom units ranging in size from 371 square feet to 1,095 square feet. The distribution of these units shall be sixteen (16) units rented to households with income levels at or below 30% TCAC AMI, fifty-eight (58) units rented to households with income levels at or below 50% TCAC AMI and seventy-six (76) units rented to households with income levels at or below 70% TCAC AMI and one (1) unrestricted manager’s unit.
The residential units will be constructed in a 5-story Type IIIA wood-frame building above two floors of Type IA structured parking that is partially below grade. The site design incorporates landscaped entryways at the retail corners, activating sidewalks and providing a retail streetscape experience with outdoor seating areas. The building design will complement the high-density transit-oriented urban environment envisioned for the Tasman East area. The building exterior includes various massing and design elements incorporated in the project’s façade and architecturally addresses its primary street frontage on Calle Del Mundo.
The project will conform to the existing design, environmental, and efficiency standards set in the approved Conditions of Approval with just a few minor revisions to the original development scope. Common area residential amenities will include a courtyard and outdoor terraces, barbecue and lounge areas, a fitness center, lobby and clubroom.
2. BORROWER: Mainline North 701, L.P., a California limited partnership is the Borrower whose administrative general partner is Mainline North GP 701 LLC, a California limited liability company and Riverside Charitable Corporation, a California nonprofit public benefit corporation as the managing general partner. Bank of America, N.A, or an affiliate thereof, shall be the initial limited partner investor.
3. DEVELOPERS: USA Multi-family Development, Inc., a California corporation and TPG Affordable LLC, a California limited liability company.
2310 Calle Del Mundo
City of Santa Clara
Housing and Community Services Division
P a g e | 2
4. PROPERTY MANAGER: USA Multifamily Management, Inc.
5. PURPOSE OF FUNDING: Construction and permanent financing.
6. LOAN/PURCHASE AMOUNT: $6,000,000 to be funded by a third-party source (i.e. no exhibits City housing funds will be used to fund the Loan). The Loan will be fully funded at closing and shall not be subject to retention or cost-savings provisions.
7. TERM OF LOAN: The Construction/Permanent Loan shall have a term of fifty- five years from the date the Project receives its certificate of occupancy (or equivalent).
8. AFFORDABLE HOUSING AGREEMENT: The Borrower shall enter into an Affordable Housing Agreement with the City that runs coterminous with the loan, fifty- five years from the date the Project receives its certificate of occupancy (or equivalent).
If the City Loan is paid off in full before its term, the Affordable Housing Agreement will continue to run its term through the expiration date.
9. INTEREST RATE: Construction/Permanent Loan - 0%.
10. PAYMENTS: Principal and interest are due in full upon the maturity date. The Construction/Permanent Loan shall be repaid on a residual receipts basis, with the City receiving a pro-rata share (based upon relative loan amounts for the City Loan and the CalHFA financing) of 50% of the net cash flow of the Project. “Net cash flow” shall mean the operating revenues less eligible operating expenses, including but not limited to, the Priority Deferred Developer Fee and L.P. and G.P. management fees, and as further specified in the loan documents. The Priority Deferred Developer Fee shall be an amount equal to $5,992,156 less any Developer Fee paid from Project Development sources. While it is currently anticipated that (i) approximately $2,503,422 of Developer Fee shall be paid in from Project Developments sources, (ii) the Priority Deferred Developer Fee Amount will be approximately $3,487,963 and (iii) the Priority Deferred Developer Fee Amount will be paid in approximately 6 years from Project cash-flow, the actual amount of the Priority Deferred Developer Fee is subject to change depending upon the actual final sources and uses for the Project which will be determined subsequent to the completion of construction of the Project. Any amount of deferred Developer Fee in excess of the Priority Deferred Developer Fee Amount shall be payable from Borrower’s share of Project residual receipts.
11. COLLATERAL/DOCUMENTATION:
The Construction/Permanent Loan shall be secured by a subordinate leasehold deed of trust on the Site and a subordinate collateral assignment of contracts, plans, and specifications. The City’s affordability restrictions shall be recorded against the Site, subject only to those encumbrances permitted by the City. The Construction/Permanent Loan will be evidenced by a loan agreement and such other documentation as required by the City.
12. AFFORDABILITY RESTRICTIONS: The City’s affordability restrictions (“Affordable 2310 Calle Del Mundo
City of Santa Clara
Housing and Community Services Division
P a g e | 3
Housing Agreement”) shall restrict sixteen (16) units rented to households with income levels at or below 30% TCAC AMI, fifty-eight (58) units rented to households with income levels at or below 50% TCAC AMI, seventy-six (76) units rented to households with income levels at or below 70% AMI and one (1) unrestricted manager’s unit.
13. OTHER LENDERS: Construction, permanent and other soft lender loans shall be provided as follows:
• Senior Tax Exempt construction financing from CalHFA/Bank of America in the anticipated amount of approximately $42,500,000 (the “Tax Exempt Construction Loan”).
• Senior Taxable construction financing from Bank of America in the anticipated amount of approximately $19,650,000 (the “Taxable Construction Loan”). • Senior Permanent Financing from CalHFA in the anticipated amount of approximately $24,000,000 (the “CalHFA Conventional Loan”). • Senior Permanent Financing from CalHFA (MIP) in the anticipated amount of approximately $7,025,000 (the “CalHFA MIP Loan”).
• Junior construction/permanent financing from Life Span Home, Inc. in the anticipated amount of approximately $1,700,000
14. SUBORDINATION: The City shall subordinate the lien of its Construction/Permanent Loan deed of trust to the liens securing the Tax Exempt Construction Loan, the Taxable Construction Loan, the CalHFA Conventional Loan and the CalHFA MIP Loan., subject to a subordination agreement in form and content acceptable to the City.
15. RESERVED.
16. DEVELOPMENT PRO FORMA: Borrower shall submit for City approval an acquisition and construction/permanent financial pro forma (the “Pro forma”) reflecting Borrower’s projections of tax credit equity, estimated income and operating expense cash flow for the Project and Development, and loan balances for 55 years to City’s satisfaction.
17. DEVELOPER FEE: Pursuant to the California Code of Regulations Section 10327(c)(2)(B) (TCAC regulations) on developer fees, the maximum developer fee shall be 15% of the Project’s unadjusted eligible basis, with the maximum cash portion of the development fee equal to or less than $2,500,000 plus $20,000 per unit for each Tax Credit unit in excess of 100 units (the “Developer Fee”).
No interest is allowed on
the deferred fee.
18. DUE DILIGENCE: Borrower shall provide all reports, studies, approvals, plans, drawings and other due diligence documents, in form and content acceptable to City, as reasonably requested by the City, including without limitation, an appraisal, a Phase I report, an ALTA survey, and preliminary title reports for the Site.
19. RESERVED.
2310 Calle Del Mundo
City of Santa Clara
Housing and Community Services Division
P a g e | 4
20. PREVAILING WAGE REQUIREMENTS: Borrower shall pay, or cause to be paid, prevailing wages for the construction and demolition work if required by state and federal prevailing wage laws, including without limitation, the California Labor Code and the Davis-Bacon Act.
21. INSURANCE: Borrower shall procure and maintain insurance in form and amount approved by the City’s requirements
22. GOOD NEIGHBOR PRACTICES: Borrower will work in collaboration with the City to address concerns and issues the community identified while simultaneously making the City aware of any such issues.
23. EXPIRATION: The City’s term sheet shall expire by January 31st, 2023, or sooner if City determines in its sole and absolute discretion that the Project is not making substantial progress towards the commencement of construction.