City of Housing & Community Services
1500 Warburton Ave.
Santa Clara Santa Clara, CA 95050
The Center of What's Possible 408-615-2490
KLAMATH APARTMENTS - TERM SHEET
AMENDMENT TO THE CITY LOAN AND AGREEMENT CONTAINING COVENANTS Date: December 5, 2024
REQUEST: Klamath Associates, a California limited partnership ("Borrower"), has requested that the City of Santa Clara (the "City"), as the successor agency to the former Redevelopment Agency of the City of Santa Clara ("Original Lender"), extend that certain loan, as more particularly described below, made to the Borrower in the original principal amount of Six Hundred Eighty-One Thousand One Hundred Seventy-Six and No/100 Dollars ($681,176.00) (the "City Loan") and in exchange for extending the City Loan, the Borrower will extend the term of that certain Agreement Containing Covenants Affecting Real Property (Including Rental Restrictions) entered into as of February 22, 1995, between Borrower and Original Lender, and recorded on February 22, 1995, in the Official Records of Santa Clara County the "Official Records") as Document #12810715 (the "Covenants Agreement"), for a period of ten (10) years, ensuring that the seventeen (17) units serving very low-income families will continue to be made available for affordable housing (collectively, the "Transaction").
Capitalized terms not otherwise defined herein shall have the meaning ascribed to such term in the Acquisition Loan Agreement dated January 1995, by and between the Original Lender and Borrower (the "Loan Agreement"), the Promissory Note Secured by Deed of Trust to the Original Lender (Klamath Gardens) dated February 22, 1995, made by Borrower, payable to Original Lender (the "Promissory Note"), Deed of Trust with Assignment of Rents (Klamath Gardens) made as of February 22, 1995, by Borrower, as trustor, Santa Clara Land Title Company, as trustee, and Original Lender, as beneficiary, and recorded on February 22, 1995, in the Official Records as Document #12810716 (the "Deed of Trust"), and the Covenants Agreement (individually and collectively, the "Loan Documents").
SUMMARY OF CITY ACTIONS:
The summary below describes the City's requirements as part of the Transaction.
A. Amendment of Loan Documents: The City Loan will be amended, and the Loan Documents will be modified, to reflect the terms set forth in Exhibit A attached hereto and incorporated B. Amendment of Covenants Agreement: The term of the Covenants Agreement will be extended by ten (10) years from October 21, 2051, to October 21, 2061, as set forth in Exhibit B attached hereto and incorporated hereby.
C. Fees: Any fees including documentation, legal fees, recording fees, title fees and any fees incurred in connection with the Transaction shall be borne by the Borrower.
TERM SHEET: Klamath Gardens
December 5, 2024
PROJECT DESCRIPTION & FINANCING OVERVIEW
1. PROJECT DESCRIPTION: The property, an affordable housing rental project consisting of 17- rent restricted units serving Very Low-Income (as such term is defined in the Loan Documents) families, is located on Klamath Avenue, Santa Clara, CA (the "Property" or "Project").
2. EXISTING CITY LOAN: The City Loan was made pursuant to the Loan Agreement, is evidenced by the Promissory Note, bears simple 6% interest with annual payments from Residual Receipts and is scheduled to mature on February 22, 2025 ("Maturity Date"), and is secured by the Deed of Trust. In addition to the Promissory Note, the Deed of Trust, and the Loan Agreement, the City recorded the Covenants Agreement. The City receives 75% of Residual Receipts, 90 days after the end of Borrower's fiscal year or every April 1 of each year. As of November 30, 2024, the City Loan has an outstanding principal balance of $681,176.00 and $997,891.25 in accrued unpaid interest.
3. SPONSOR: Santa Clara County Housing Authority.
4. CITIBANK LOAN: Citibank made a permanent loan to the Borrower in the original principal amount of $750,000, payable in monthly installments, with a maturity date of May 1, 2027 (the "Citibank Loan"). The Loan Documents and Covenants Agreement are subordinate to the Citibank Loan.
5. AMENDED AND RESTATED CITY LOAN: The revised City Loan terms are set forth in Exhibit A "Amendments to the Terms and Conditions of the Existing City Loan," attached hereto. The Covenants Agreement shall be amended and restated as set forth in Exhibit B.
6. DOCUMENTATION:
a. This Term Sheet is not intended to set all the terms, conditions and documents required by he City for this transaction, which shall include customary provisions and documents tr e approved by City (including, but not limited to, all such documents mentioned in thi erm Sheet and all City documents evidencing, securing, or related to City document:
related to this Project, shall in all respects be satisfactory to City (collectively, "Cit Documents").
b. Additional Documentation: Borrower shall promptly deliver to City any further documentation which may be required by City.
c. Changes or Amendments: No Project loan documents which are subject to City's review or approval shall be modified in any material aspect or terminated without the prior written approval of the City. Such approval will be focused on whether such changes are consistent with the long-term viability and financial projections for the Project. d. Conflict: If a conflict arises between terms herein and terms in the City Documents, the City Documents shall prevail.
e. Expiration: This Term Sheet shall expire if not executed by December 31, 2024.
TERM SHEET: Klamath Gardens
December 5, 2024
7. ATTACHMENTS:
a. Exhibit A: Amendments to the Terms and Conditions of the Existing City Loan b. Exhibit B: Amendments to Agreement Containing Covenants [SIGNATURES IN THE FOLLOWING PAGES]
TERM SHEET: Klamath Gardens
December 5, 2024
ACCEPTED BY:
"BORROWER"
Klamath Associates, a California limited partnership
S.P.G. Housing, Inc.,
a California nonprofit public benefit corporation,
its General Partner
By: Preston Prince (Jan 6, 202509:00 PST)
Name: : Preston Prince
Title: President
01/06/2025
Date:
ACKNOWLEDGED BY:
The City of Santa Clara,
a California municipal corporation
By:
Adam Marcus
Housing and Community Services Division Manager
1/16/2025
Date:
TERM SHEET: Klamath Gardens
December 5, 2024
EXHIBIT A
AMENDED TERMS AND CONDITIONS TO THE EXISTING CITY LOAN
1. LOAN MATURITY DATE: The maturity date of the City Loan will be extended from February 22, 2025, to February 22, 2035.
2. INTEREST RATE: Simple interest shall accrue on the outstanding principal balance of the City Loan at the rate of 3% per annum.
3. LOAN DOCUMENTS: The Borrower will enter into the following: (i) Amended and Restated Loan Agreement; (ii) Amended and Restated Promissory Note; and (iii) Amended and Restated greement Containing Covenants Affecting Real Property (Including Rental Restrictions), whic ocuments shall evidence the City Loan terms as set forth in this Term Shee
4. PAYMENTS: Annual payments in an amount equivalent to 50% of Residual Receipts, commencing on April 1, 2025, and every April 1" thereafter.
5. ADDITIONAL RESERVE ACCOUNT (REPLACEMENT RESERVE) DEPOSITS: Annual deposits to the Reserve Account (as defined in the Promissory Note) shall be increased by $0,40%, if cash is available, which deposits shall not be included as an Operating Expense when calculating Residual Receipts.
6. CONTRACT OVERSIGHT FEE: The contract oversight fee equal to .75% of the operating revenue paid to the Sponsor will no longer be allowed as an Operating Expense when calculating Residual Receipts. Borrower, at its option, may pay the contract oversight fee from its 50% share of Residual Receipts.
7. CASH FLOW PROJECTIONS: Prior to the close of the Transaction, the Borrower shall submit an updated pro forma budget to the City for approval. The pro forma should reflect the Borrower's projections of the income, operating expenses, and cash flow for the Property.
8. ORGANIZATIONAL AGREEMENTS: Borrower shall submit to City, General Partner's articles of incorporation/by-laws, corporate resolutions authorizing the Transaction and incumbency certificate with all exhibits and amendments thereto and related filings or recorded documents, a current good status certificate, Borrower's limited partnership agreement, certificate of limited partnership and any amendments thereto, and such related documentation as City may request.
9. COMPLIANCE: Prior to closing, the Sponsor must be in compliance on all its projects with the City including, but not limited to, rent and income compliance and document submission compliance.
TERM SHEET: Klamath Gardens
December 5, 2024
EXHIBIT B
AMENDMENTS TO AGREEMENT CONTAINING COVENANTS
1. TERM: The term of the Covenants Agreement will be extended by ten (10) years, from October 21, 2051, to October 21, 2061.
2. AGREEMENT CONTAINING COVENANTS SUBORDINATION: The Covenants Agreement, as amended, shall remain subordinate to the Citibank Loan.