Ryan Dyson, Housing Specialist II
November 19, 2024
1171 Sonora Court
Purchase and Sale Agreement and
Disposition and Development Agreement
2City of Sunnyvale – 1171 Sonora PSA and DDA – City Council – November 2024 Background
Event Date
MidPen Purchases 1171 Sonora June 2021
City $500k HMF Predev Award October 2022
Planning Application Submittal December 2023
City ~$14M HMF Award
• $12.5 for City’s Acquisition
• ~$1.5 for Predevelopment
August 2024
PSA/DDA Negotiations August – November 2024
City Council Land Purchase/DDA November 2024
3City of Sunnyvale – 1171 Sonora PSA and DDA – City Council – November 2024 • Owner: MP Land Holdings LLC
MidPen Subsidiary
• Purchase Price: $12.5M (June 2021)
• 1.3-acre Site
• Light Industrial/R&D Building
• Lawrence Station Area Plan
• Near Lawrence Caltrain & Ira D. Hall
Square
Terms of PSA/DDA based on Ira D.
Hall Square site
Overview of Site
Lawrence Caltrain
•Lawrence Expy
Ira D Hall Square
Subject Site
4City of Sunnyvale – 1171 Sonora PSA and DDA – City Council – November 2024 Timing
• Site is currently in High Resource area
• High Resource Category “locked in” if
DDA executed by end of 2024
• City acquisition must also take place
• Increases competitiveness for Tax
Credits and other funding
5City of Sunnyvale – 1171 Sonora PSA and DDA – City Council – November 2024 Purchase and Sale Agreement (PSA)
• $12.5M Purchase Price
Same as MidPen’s purchase price in 2021
• $100,000 Deposit
• MidPen pays closing costs
• 30-day due diligence period after execution
Phase I Environmental Assessment complete
No concerns identified
6City of Sunnyvale – 1171 Sonora PSA and DDA – City Council – November 2024 PSA: Commercial Tenant Lease
• Commercial tenant lease will be
assigned to City
Tech-Star Industries
Month-to-month lease
• Tech-Star searching for new location
• Terminable by either party on 60-day
notice
Monthly Rent: $25,000
• Deposited in Housing Mitigation Fund
7City of Sunnyvale – 1171 Sonora PSA and DDA – City Council – November 2024 Disposition and Development Agreement (DDA)
• Affordable Housing Agreement
• Ground Lease with MidPen (Short-term and Long-term)
• City Predevelopment Loan Documents
Contains form of documents:
• Project Scope of Work
• Preliminary Financing Plan
• Development Schedule
Sets terms for development:
8City of Sunnyvale – 1171 Sonora PSA and DDA – City Council – November 2024 DDA: Predev Loan and Ground Leases
City HMF Predev Loan: $1,533,000
• 3% Simple Interest
• 55-Year Term (beginning at occupancy)
• Loan funds disbursed upon DDA execution
Short-term Ground
Lease:
Begins following termination of Tech-Star lease, ends at construction closing
Long-term Ground Lease
Term:
85 years
Long-term Ground Lease
Rent Amount:
After payment of predev loan, lesser of:
• $1,250,000
• City’s pro rata share of Net Operating Income
9City of Sunnyvale – 1171 Sonora PSA and DDA – City Council – November 2024 DDA: Project Scope
Total Units: 172 (170 affordable + 2 manager)
Affordability Term: 85 years
Average Income
Limit: 50% of Area Median Income (AMI)
Special Needs Units: At least 20% of units at 30% AMI
• Intended for Permanent Supportive Housing
Total Budget: Approx. $184M
10City of Sunnyvale – 1171 Sonora PSA and DDA – City Council – November 2024 DDA: Preliminary Financing Plan
Funding Source Amount
City Land Purchase $12,500,000
City Predevelopment Loan (2024) $1,533,000
City Predevelopment Loan (2022) $500,000
Permanent Loan $16,582,317
Tax Credit Investor Proceeds $76,565,203
HCD – Affordable Housing Sustainable Communities (AHSC) $28,000,000 HCD – Infill Infrastructure Grant (IIG) $4,500,000
Federal Home Loan Bank – Affordable Housing Program (AHP) $2,000,000 General Partner Equity $15,511,134
Deferred Developer Fee $1,904,990
Other local, state, or regional sources $24,198,172
Total $183,794,816
11City of Sunnyvale – 1171 Sonora PSA and DDA – City Council – November 2024 DDA: Development Schedule
Entitlements
Secured:
June 2025
Soft Financing
Applications:
January 2026
Tax Credit
Application:
Fall 2027
Building Permit
App Submitted:
1 month after
Tax Credit award
Full Financing
Secured:
4 months after
Tax Credit award
Construction
Commencement:
6 months after
Tax Credit award
DDA Term:
3 Years
(1-Year Extension by City Manager)
12City of Sunnyvale – 1171 Sonora PSA and DDA – City Council – November 2024 • Fulfills ~$14M NOFA Award
$12.5M for City’s Acquisition
~$1.5M for Predevelopment Loan
• Expands City’s affordable housing supply
• Ensures 1171 Sonora Court is competitive for Tax Credit and other financing
Staff Recommendation (Alternatives 1 and 4)
13City of Sunnyvale – 1171 Sonora PSA and DDA – City Council – November 2024 Staff Recommendation
Recommend:
• Alternative 1: Approve the Purchase and Sale Agreement and Authorize the City Manager to execute it for the purchase of 1171 Sonora Court for $12,500,000; and find that this action is exempt from CEQA.
• Alternative 4: Adopt the Resolution authorizing the Ground Lease and declaring the property to be exempt from the Surplus Lands Act, Approve the draft Disposition and Development Agreement and authorize the City Manager to execute it in substantially the same form as Attachment 2 to the report and in a form approved by the City Attorney; and find that this action is exempt from CEQA.
Alternatives 1 and 4