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HomeMy WebLinkAboutresolution.council.133-18 RESOLUTION#133 (Series of 2018) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ASPEN CONCERNING THE ASPEN HOUSING PARTNERS PROJECT AND APPROVING THE EXECUTION OF NON-BINDING CONSTRUCTION LOAN TERM SHEETS AND TO SET FORTH THE CITY OF ASPEN'S INTENT AS CONSTRUCTION LENDER WHEREAS the provision of affordable housing is important to allow people who work in the City of Aspen (the "City") and Pitkin County to live near where they work and to be part of the community;and WHEREAS, the Aspen Housing Partners project (the "Project") is a 45-unit affordable rental project consisting of(24) units to be developed at 488 Castle Creek Road, (10) units to be developed at 802 West Main Street and (11) units to be developed at 517 Park Circle; and WHEREAS, the three borrowing entities shall be 488 Castle Creek LLC, 802 Main Street LLC and 517 Park Circle LLC, each of which is a single asset Colorado limited liability company;and WHEREAS, the co-managing members of the three borrowing entities shall be Colony Development-CO., LLC and SCG Development Partners, LLC, which were selected as the City's developer through a competitive request for proposals process; and WHEREAS, the City desires to offer tax-exempt construction-only loans and leasehold permanent subordinate second mortgage loans for a total of (45) units of multifamily rental apartments located at 488 Castle Creek Road, 802 West Main Street and 517 Park Circle; and WHEREAS, in connection with the tax-exempt construction-only loans and leasehold permanent subordinate second mortgage loans, attached hereto are proposed non-binding terms and conditions for offering the described loans; and WHEREAS, the City is willing to memorialize its intent to offer the described loans by approving the term sheets attached hereto. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ASPEN: 1. The Council hereby determines that the provision of affordable housing such as the Project and, in connection therewith, the memorialization of the City's intent to offer the loans as described herein by approving the term sheets attached hereto serves an important public purpose; and 2. The Council does hereby approve the offer of the loans described in this Resolution and the attached proposed loan term sheets and with the intent of 1 funding the loans through the City of Aspen 150 Housing Development Fund; and 3. Approval of this Resolution shall immediately memorialize the intent of the City to offer the tax-exempt construction-only loans and leasehold permanent subordinate second mortgage loans as described in this Resolution and the attached proposed loan term sheets. 4. No provision of this Resolution and the attached proposed loan term sheets shall be construed or interpreted to obligate the City to enter any agreement or make any payment without further approval by Council of comprehensive loan agreements which shall govern the loans. INTRODUCED, READ AND ADOPTED by the City Council of the City of Aspen on the 17th day of September,2018. 1 Steven Skad on,Mayor I, Linda Manning, duly appointed and acting City Clerk d certify that the foregoing is a true and accurate copy of that resolution adopted by he City Council of the City of Aspen, Colorado,at a meeting held on September 17,2018. inda Manning,City Clerk 2 Exhibit A - 488 CASTLE CREEK - Construction Loan Term Sheet August 22, 2018 Mr.Jason Bradshaw Colony Partners 242 Mountain Laurel Drive Aspen, Colorado 81611 Mr. Stephen Wilson SCG Development Partners, LLC 8245 Boone Blvd,Suite 640 Tysons Corner,Virginia 22182 Dear Mr. Bradshaw and Mr. Wilson: Thank you for your interest in receiving a financing proposal from the City of Aspen, Colorado (hereinafter "CoA"). The following is not a commitment to lend, but rather an indication of CoA's anticipated financing structure and is further contingent upon CoA's satisfactory review and approval of the project. Upon agreeing to the following terms and subject to a full underwriting and approval, a commitment letter may be issued describing all terms and conditions. PROPOSED TERMS AND CONDITIONS: Borrower: 488 Castle Creek, LLC, a single asset Colorado limited liability ("Borrower"). Purpose: (i) To provide a tax-exempt construction-only loan to the Colorado Housing and Finance Agency (the "Governmental Lender") for the development of(24) units of multifamily rental apartments at 488 Castle Creek Road ("Property").The proceeds of the Loan to Governmental Lender shall fund a construction-only loan ("Tax-exempt Loan") by Governmental Lender to the Borrower for the Property described below. If required by Governmental Lender, a fiscal agent ("Fiscal Agent") will be appointed and will be responsible for following the terms of the Tax- exempt Loan documents and administering funds held under the Construction Funding Agreement. The Tax-exempt Loan will have a Construction Phase only-an initial phase during which funds will be advanced to Governmental Lender and loaned to Borrower (directly or through a Fiscal Agent, at Governmental Lender's discretion) on a "drawing down" basis. Payments on the Tax-exempt Loan during the Construction Phase will be interest only. Upon stabilization of the property, the loan will be repaid. 1age Exhibit A - 488 CASTLE CREEK - Construction Loan Term Sheet (ii). Upon repayment in full of the Tax-exempt Loan, to provide a permanent subordinate 2nd leasehold mortgage loan for (24) units of multifamily rental apartments located at the Property. Members: The members of the Borrower are: (i) 488 Castle Creek GP, LLC, (0.01%) Colony Development-CO., LLC and SCG Development Partners, LLC as co-managing members. (ii) 488 Castle Creek Investors, LLC (99.98%) The Low Income Housing Tax Credit ("LIHTC") Investor/Syndicator, the upper tier investor(s) and the terms and conditions of the operating agreement must be acceptable to the City of Aspen in all respects including the timing and conditions of funding capital contributions. (iii) APCHA (0.01%) Special member Ground Lease: The Property will be constructed on land owned by CoA pursuant to a 40- year ground lease (with an option for the Borrower to extend the term by an additional 10 years). The ground lease rent will be an annual payment of $10.00. All improvements will be owned by the Borrower. The Borrower will be responsible for all operating and ownership costs throughout the term of the ground lease. Lender: City of Aspen (CoA), funds from 150 Housing Development Fund. Loan Amount: The loan amounts shall not exceed Thirteen-Million Three-Hundred and Six Thousand One Hundred Twenty Dollars and no/00s ($13,306,120.00) and be funded in accordance with an agreed to construction flow of funds with the estimated 1St mortgage construction loan maximum of $7,356,750 (TBD by CHFA standard and requirement to meet the "50% test" as required by tax exempt bond rules) with interest of (2% to 2.5% cash pay TBD) and the permanent 2"d mortgage maximum of $5,949,370 with interest of(2 to 2.5%accrued TDB). Loan Term: The construction loan shall mature in 24 months. The permanent 2nd leasehold mortgage loan shall mature in 15 years (based 25-year 21 Page Exhibit A - 488 CASTLE CREEK - Construction Loan Term Sheet amortization schedule) or be co-terminus with the 1St leasehold permanent mortgage loan. Permanent Loan: CoA will require prior to closing an acceptable commitment for a permanent loan takeout ("takeout") of Part B of the construction loan under terms and conditions acceptable to the CoA. The amount of the permanent loan must not be less than $1,200,000. Development Budget: A review of the Development Budget outlining the proforma sources and uses of funds is required by CoA prior to closing this loan. Disbursement Condition: Based on approved monthly draw requests including City of Aspen Quality Assurance/Quality Control ("QA/QC") site inspections. Construction Draw Monitoring(CDM): A construction draw monitor and processor will attend, review and approve the monthly construction draw requisition. The costs of the CDM will be paid for by the Borrower. Appraisal: A real estate appraisal will be provided by the Borrower in form and content acceptable to CoA. Repayment: During the construction term of the loan, the loan will be on an interest only basis with interest payments funded from the interest reserve included in the construction budget. During the permanent term of the loan, the interest and principal will be paid from 75% of cash flow after payment of any deferred development fee. Interest: The interest rate of the Part A loan shall be based on an annual fixed rate of 0.25% and will accrue during the construction period. The interest rate of the Part B loan shall be based on an annual fixed rate of 2% to 2.5% (TBD) and will be calculated and paid monthly. Fees: NA Collateral: Construction Period: This loan will be secured by a title insured first Leasehold Mortgage against the Property and an assignment of Rents Leases and Profits as 31Page Exhibit A - 488 CASTLE CREEK - Construction Loan Term Sheet well as a general assignment of all construction related contracts, permits and documentation. Permanent Period: This loan will be secured by a title insured second Leasehold Mortgage against the Property and an assignment of Rents Leases and Profits. Guarantor(s): Joint and Several guarantees from Jason Bradshaw and SCG Development Partners, LLC. through construction completion. Banking Relationships: CoA will require the Borrower to establish a deposit account for the project with the bank acceptable to the CoA. Loan Agreement: The construction loan will be subject to a comprehensive loan agreement, which shall govern certain aspects of the loan, the construction of the projects, and the Borrower and Guarantor's financial condition. These may include, but not be limited to, financial statement reporting and limitations on additional borrowings and liens on the property being financed. The permanent loan will be subject to a comprehensive loan agreement, which shall govern certain aspects of the loan, and the Borrower and Guarantor's financial condition. These may include, but not be limited to, financial statement reporting and limitations on additional borrowings and liens on the property being financed REGULATORY AGREEMENT: A Regulatory Agreement with a term of fifty (50) years from the date the Certificate of Occupancy or Placed in Service Date is issued to the Development, which specifies among other requirements, eligible occupancy standards, maximum affordable rents and minimum operating and preplacement reserves, which may be subordinated to other lenders with Agency approval. OCCUPANCY RESTRICTIONS: All units shall be occupied by households earning no more than incomes dictated by the lesser of 60% AMI as determined by CHFA / HUD and APHCA Category 1 and /or 2 incomes (unit depending). Such restrictions shall be included in a deed restriction record against the property. RENT RESTRICTIONS: Rents for the units will be the lesser of 60% AMI rents as determined by CHFA / HUD and APHCA Category 1 and / or 2 (unit depending). Such 41 Page Exhibit A - 488 CASTLE CREEK - Construction Loan Term Sheet restrictions shall be included in a deed restriction record against the property. Other: Any approval, commitment, or closing of any loan will be subject to all of the following (i) Aspen City Council approval and (ii) underwriting and/or documentation requirements of CoA and its counsel. Those requirements may include but may not be limited to appraisals; surveys and environmental assessments; approval of the General Contractor, construction contracts, plans and specifications by CoA or independent project inspectors; and/or legal opinions and title insurance. All costs and expenses incurred to close a loan and perfect any security interest shall be the responsibility of Borrower. 44045724.%1 51 Page Exhibit B - 802 W MAIN ST - Construction Loan Term Sheet August 22,2018 Mr.Jason Bradshaw Colony Partners 242 Mountain Laurel Drive Aspen, Colorado 81611 Mr. Stephen Wilson SCG Development Partners, LLC 8245 Boone Blvd,Suite 640 Tysons Corner,Virginia 22182 Dear Mr. Bradshaw and Mr. Wilson: Thank you for your interest in receiving a financing proposal from the City of Aspen, Colorado (hereinafter "CoA"). The following is not a commitment to lend, but rather an indication of CoA's anticipated financing structure and is further contingent upon CoA's satisfactory review and approval of the project. Upon agreeing to the following terms and subject to a full underwriting and approval, a commitment letter may be issued describing all terms and conditions. PROPOSED TERMS AND CONDITIONS: Borrower: 802 Main Street, LLC, a Colorado limited liability ("Borrower"). Purpose: To provide a leasehold construction loan that converts into a leasehold permanent subordinate 2nd mortgage loan for (10) units of multifamily rental apartments located at 802 Main Street, Aspen, Colorado ("Property"). Members: The members of the Borrower are: (i) 802 Main Street GP, LLC, (0.01%) Colony Development Co., LLC and SCG Development Partners, LLC as co-managing members. (ii) Main Street Investors, LLC (99.98%) Affiliates of Colony Development Co., LLC and Stratford Capital Group, LLC as members. (iii) APCHA (0.01%) Special member 11 Page Exhibit B - 802 W MAIN ST - Construction Loan Term Sheet Ground Lease: The Property will be constructed on land owned by CoA pursuant to a 40- year subordinate ground lease (with an option for the Borrower to extend the term by an additional 10 years). The ground lease rent will be an annual payment of $10.00. All improvements will be owned by the Borrower. The Borrower will be responsible for all operating and ownership costs throughout the term of the ground lease. Lender: City of Aspen (CoA), funds from 150 Housing Development Fund. Loan Amount: The loan amount shall not exceed Five-Million Six-Hundred and Ninety Five Thousand Dollars and no/00s ($5,695,000.00) and be funded in two separate components of Part A equal to $4,852,000 and Part 8 equal to $843,000. Part A — Part A will be a 1St leasehold mortgage funded during construction. When construction is complete and the permanent 1St leasehold mortgage loan is funded, Part A will "convert" to a 2nd leasehold permanent mortgage loan. Part B - Part B will be a 1St leasehold mortgage funded during construction after the Part A loan is fully advanced. When construction is complete and the permanent 1" leasehold mortgage loan is funded, it is anticipated that Part A shall be fully repaid with interest of (2 to 2.5% TDB). Loan Term: The construction loan shall mature in 24 months. The permanent 2nd leasehold mortgage loan shall mature in 15 years (based 25-year amortization schedule) or be co-terminus with the 1s' leasehold permanent mortgage loan. Permanent Loan: CoA will require prior to closing an acceptable commitment for a permanent loan takeout ("takeout") of Part B of the construction loan under terms and conditions acceptable to the CoA. The amount of the permanent loan must not be less than $900,000. Development Budget: A review of the Development Budget outlining the proforma sources and uses of funds is required by CoA prior to closing this loan. 21 Page Exhibit B - 802 W MAIN ST - Construction Loan Term Sheet Disbursement Condition: Based on approved monthly draw requests including City of Aspen Quality Assurance/Quality Control ("QA/QC") site inspections. Construction Draw Monitoring(CDM): A construction draw monitor and processor will attend, review and approve the monthly construction draw requisition. The costs of the CDM will be paid for by the Borrower. Appraisal: A real estate appraisal will be provided by the Borrower in form and content acceptable to CoA. Repayment: During the construction term of the loan, the loan will be on an interest only basis with interest payments funded from the interest reserve included in the construction budget. During the permanent term of the loan, the interest and principal will be paid from 75% of cash flow after payment of any deferred development fee. Interest: The interest rate of the Part A loan shall be based on an annual fixed rate of 0.25%and will accrue during the construction period. The interest rate of the Part B loan shall be based on an annual fixed rate of 2% to 2.5% (TBD) and will be calculated and paid monthly. Fees: NA Collateral: Construction Period: This loan will be secured by a title insured first Leasehold Mortgage against the Property and an assignment of Rents Leases and Profits as well as a general assignment of all construction related contracts, permits and documentation. Permanent Period: This loan will be secured by a title insured second Leasehold Mortgage against the Property and an assignment of Rents Leases and Profits. 31 Page Exhibit B - 802 W MAIN ST - Construction Loan Term Sheet Guarantor(s): Joint and Several guarantees from Jason Bradshaw and SCG Development Partners, LLC. through construction completion. Banking Relationships: CoA will require the Borrower to establish a deposit account for the project with the bank acceptable to the CoA. Loan Agreement: This loan will be subject to a comprehensive loan agreement, which shall govern certain aspects of the loan, the construction of the projects, the Borrower and Guarantor's financial condition. These may include, but not be limited to, financial statement reporting and limitations on additional borrowings and liens on the property being financed. REGULATORY AGREEMENT: A Regulatory Agreement with a term of fifty (50) years from the date the Certificate of Occupancy or Placed in Service Date is issued to the Development, which specifies among other requirements, eligible occupancy standards, maximum affordable rents and minimum operating and preplacement reserves, which may be subordinated to other lenders with Agency approval. OCCUPANCY RESTRICTIONS: All units shall be occupied by households earning no more than incomes dictated by the Aspen Pitkin Housing Authority for Categories 2, 3 and 4. Such restrictions shall be included in a deed restriction record against the property. RENT RESTRICTIONS: All rents for the units regarding income targeted households (see Occupancy Restrictions) shall be those established by the Aspen Pitkin County Housing Authority. Other: Any approval, commitment, or closing of any loan will be subject to all of the following (i) Aspen City Council approval and (ii) underwriting and/or documentation requirements of CoA and its counsel. Those requirements may include but may not be limited to appraisals; surveys and environmental assessments; approval of the General Contractor, construction contracts, plans and specifications by CoA or independent project inspectors; and/or legal opinions and title insurance. All costs and expenses incurred to close a loan and perfect any security interest shall be the responsibility of Borrower. 41 Page Exhibit C - 517 PARK CIRCLE - Construction Loan Term Sheet August 22,2018 Mr.Jason Bradshaw Colony Partners 242 Mountain Laurel Drive Aspen, Colorado 81611 Mr. Stephen Wilson SCG Development Partners, LLC 8245 Boone Blvd,Suite 640 Tysons Corner,Virginia 22182 Dear Mr. Bradshaw and Mr. Wilson: Thank you for your interest in receiving a financing proposal from the City of Aspen, Colorado (hereinafter "CoA"). The following is not a commitment to lend, but rather an indication of CoA's anticipated financing structure and is further contingent upon CoA's satisfactory review and approval of the project. Upon agreeing to the following terms and subject to a full underwriting and approval, a commitment letter may be issued describing all terms and conditions. PROPOSED TERMS AND CONDITIONS: Borrower: 517 Park Circle, LLC, a Colorado limited liability("Borrower"). Purpose: To provide a leasehold construction loan that converts into a leasehold permanent subordinate 2nd mortgage loan for (11) units of multifamily rental apartments located at 517 Park Circle, Aspen, Colorado ("Property"). Members: The members of the Borrower are: (i) 517 Park Circle GP, LLC, (0.01%) Colony Development-CO., LLC and SCG Development Partners, LLC as co-managing members. (ii) 517 Park Circle Investors, LLC (99.98%) Affiliates of Colony Development-CO., LLC and Stratford Capital Group, LLC as members. (iii) APCHA (0.01%) Special member 11 Page Exhibit C - 517 PARK CIRCLE - Construction Loan Term Sheet Ground Lease: The Property will be constructed on land owned by CoA pursuant to a 40- year subordinate ground lease (with an option for the Borrower to extend the term by an additional 10 years). The ground lease rent will be an annual payment of $10.00. All improvements will be owned by the Borrower. The Borrower will be responsible for all operating and ownership costs throughout the term of the ground lease. Lender: City of Aspen (CoA), funds from 150 Housing Development Fund. Loan Amount: The loan amount shall not exceed Six-Million Six-Hundred and Ten Thousand Four Hundred Dollars and no/00s ($6,610,400.00) and be funded in two separate components of Part A equal to $5,387,700 and Part B equal to $1,222,700. Part A — Part A will be a 1s' leasehold mortgage funded during construction. When construction is complete and the permanent 1St leasehold mortgage loan is funded, Part A will "convert" to a 2nd leasehold permanent mortgage loan. Part 8 - Part B will be a 1" leasehold mortgage funded during construction after the Part A loan is fully advanced. When construction is complete and the permanent 1" leasehold mortgage loan is funded, it is anticipated that Part A shall be fully repaid with interest of (2 to 2.5% TDB). Loan Term: The construction loan shall mature in 24 months. The permanent 2nd leasehold mortgage loan shall mature in 15 years (based 25-year amortization schedule) or be co-terminus with the 1St leasehold permanent mortgage loan. Permanent Loan: CoA will require prior to closing an acceptable commitment for a permanent loan takeout ("takeout") of Part B of the construction loan under terms and conditions acceptable to the CoA. The amount of the permanent loan must not be less than $1,400,000. Development Budget: A review of the Development Budget outlining the proforma sources and uses of funds is required by CoA prior to closing this loan. 21 Page Exhibit C - 517 PARK CIRCLE - Construction Loan Term Sheet Disbursement Condition: Based on approved monthly draw requests including City of Aspen Quality Assurance/Quality Control ("QA/QC") site inspections. Construction Draw Monitoring(CDM): A construction draw monitor and processor will attend, review and approve the monthly construction draw requisition.The costs of the CDM will be paid for by the Borrower. Appraisal: A real estate appraisal will be provided by the Borrower in form and content acceptable to CoA. Repayment: During the construction term of the loan, the loan will be on an interest only basis with interest payments funded from the interest reserve included in the construction budget. During the permanent term of the loan, the interest and principal will be paid from 75% of cash flow after payment of any deferred development fee. Interest: The interest rate of the Part A loan shall be based on an annual fixed rate of 0.25% and will accrue during the construction period. The interest rate of the Part B loan shall be based on an annual fixed rate of 2% to 2.5% (TBD) and will be calculated and paid monthly. Fees: NA Collateral: Construction Period: This loan will be secured by a title insured first Leasehold Mortgage against the Property and an assignment of Rents Leases and Profits as well as a general assignment of all construction related contracts, permits and documentation. Permanent Period: This loan will be secured by a title insured second Leasehold Mortgage against the Property and an assignment of Rents Leases and Profits. 31 Page Exhibit C - 517 PARK CIRCLE - Construction Loan Term Sheet Guarantor(s): Joint and Several guarantees from Jason Bradshaw and SCG Development Partners, LLC. through construction completion. Banking Relationships: CoA will require the Borrower to establish a deposit account for the project with the bank acceptable to the CoA. Loan Agreement: This loan will be subject to a comprehensive loan agreement, which shall govern certain aspects of the loan, the construction of the projects, the Borrower and Guarantor's financial condition. These may include, but not be limited to, financial statement reporting and limitations on additional borrowings and liens on the property being financed. REGULATORY AGREEMENT: A Regulatory Agreement with a term of fifty (50) years from the date the Certificate of Occupancy or Placed in Service Date is issued to the Development, which specifies among other requirements, eligible occupancy standards, maximum affordable rents and minimum operating and preplacement reserves, which may be subordinated to other lenders with Agency approval. OCCUPANCY RESTRICTIONS: All units shall be occupied by households earning no more than incomes dictated by the Aspen Pitkin Housing Authority for Categories 2, 3 and 4. Such restrictions shall be included in a deed restriction record against the property. RENT RESTRICTIONS: All rents for the units regarding income targeted households (see Occupancy Restrictions) shall be those established by the Aspen Pitkin County Housing Authority. Other: Any approval, commitment, or closing of any loan will be subject to all of the following (i) Aspen City Council approval and (ii) underwriting and/or documentation requirements of CoA and its counsel. Those requirements may include but may not be limited to appraisals; surveys and environmental assessments; approval of the General Contractor, construction contracts, plans and specifications by CoA or independent project inspectors; and/or legal opinions and title insurance. All costs and expenses incurred to close a loan and perfect any security interest shall be the responsibility of Borrower. 41 Page