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Home My WebLink AboutRES HA-097RESOLUTION NO. HA-97 A RESOLUTION OF THE PALM DESERT HOUSING AUTHORITY APPROVING A LETTER AGREEMENT REGARDING THE RE - SYNDICATION OF PD HOVLEY LIMITED PARTNERSHIP AND RELATED MATTERS RECITALS: A. Pursuant to AB X1 26 (which became effective in June 2011) and the California Supreme Court's decision in California Redevelopment Association, et al. v. Ana Matosantos, et al., 53 Cal.4th 231 (2011), the former Palm Desert Redevelopment Agency (the "Former RDA") was dissolved as of February 1, 2012, the Successor Agency was constituted, and the Oversight Board of the Successor Agency (the "Oversight Board") was established. B. Pursuant to Section 34175(b) of the California Health and Safety Code ("HSC"), assets of the Former RDA transferred to the control of the Successor Agency by operation of law. C. Pursuant to HSC Section 34176(b), the City Council of the City of Palm Desert (the "City") adopted Resolution No. 2012-07, electing for the City to not retain the responsibility for performing housing functions previously performed by the Former RDA, and determining that all of the assets, as allowed by law, and all rights, powers, liabilities, duties, and obligations associated with the housing activities of the Former RDA be transferred to the Palm Desert Housing Authority ("Housing Authority"). D. The Housing Authority, as successor in interest to the Former RDA, is a party to that certain Disposition and Development Agreement (as amended, the "DDA") with PD Hovley Limited Partnership (the "Partnership") dated as of June 14, 2001, and by which a loan was made to the Partnership in the original principal amount of Seven Million Six Hundred Fifty -Nine Thousand Four Hundred Thirty -Seven Dollars ($7,659,437.00) (the "Housing Authority Loan") for the development of a 163-unit apartment complex located on that certain real property located in Palm Desert, California and commonly known as Hovley Gardens Apartments (the "Project"). The current principal balance of the Housing Authority Loan is approximately Six Million Two Hundred Thousand Dollars ($6,200,000.00). E. An affiliate of Palm Communities acts as the Administrative General Partner of the Partnership. Palm Communities has requested to re -syndicate and restructure the financing of the Project to obtain a new allocation of nine percent (9%) Low Income Housing Tax Credits (the "Tax Credit Allocation") to allow for an extensive rehabilitation of the Project. F. The Housing Authority wishes to approve of the proposed re -syndication and restructuring of the financing of the Project, including the Housing Authority Loan, as described in the letter addressed to Palm Communities and attached hereto (the "Letter Agreement"). RESOLUTION NO. _HA-97 NOW, THEREFORE, THE PALM DESERT HOUSING AUTHORITY DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section 1. Recitals. The above recitals, and each of them, are true and correct. Section 2. Approval of Proposed Re -Syndication and Restructuring of the Project. The Housing Authority hereby approves the re -syndication and restructuring of the Project and the Housing Authority Loan, as described in the attached Letter Agreement. Section 3. Further Conditions. The Housing Authority will not be bound by the attached Letter Agreement or otherwise with respect to the re -syndication or restructuring of the Project unless and until the Tax Credit Allocation shall have been awarded to the Project, all other conditions described in the Letter Agreement shall have been satisfied, and all documents pertaining thereto (including, without limitation, the loan documentation pertaining to the proposed construction and permanent loans) shall have been submitted in final form and approved by the Palm Desert Housing Authority Board (the "Board"), and the Board authorizes their execution and delivery, as appropriate. Section 4. Other Acts. The Executive Director of the Housing Authority and all other officers of the Housing Authority are hereby authorized, jointly and severally, to execute and deliver any and all necessary documents and instruments and to do all things which they may deem necessary or proper to effectuate the purposes of this Resolution. Any actions previously taken by officers of the Housing Authority consistent with the purposes of this Resolution are hereby ratified and confirmed. PASSED, APPROVED, AND ADOPTED at a regular meeting of the Palm Desert Housing Authority, on the 25th day of June, 2020, by the following vote, to wit: AYES: HARNIK, JONATHAN, BELLY, WEBER, AND NESTANDE NOES: NONE ABSENT: NONE ABSTAIN: NONE ATTEST: GRACE L. ROCHA, ACTING SECRETARY PALM DESERT HOUSING AUTHORITY P6401-0001 \2428106v2.doc 2 tINA itAI/1? fu2a,,u2lig NESTANDE, CHAIRMAN ATTACHMENT 1 [Attach Form of Letter Agreement] (see attached) RESOLUTION NO. HA-97 [This page has intentionally been left blank.] MR ea MIN aid MR owl June 25, 2020 Danavon L. Horn, President Palm Communities 100 Pacifica, Suite 205 Irvine, CA 92618 PAIM IIESERI NOSING DUTHORITY 73-510 FRIiD WARIN(, DRIVE PALM DESERT, CALIFORNIA 92260-2578 TEL: 760 3 46-06 i i infocit}ufpalmde,ert org RESOLUTION NO. HA-97 Re: Conditional Agreement Regarding Hovley Gardens Re -Syndication Dear Mr. Horn: The Palm Desert Housing Authority (the "Housing Authority"), as successor in interest to the former Palm Desert Redevelopment Agency, is a party to that certain Disposition and Development Agreement (as amended, the "DDA") with Palm Communities (the "Palm Communities"), as successor -in -interest to Palm Desert Development Company, dated as of June 14, 2001, and by which a loan was made to the Palm Communities in the original principal amount of Seven Million Six Hundred Fifty -Nine Thousand Four IHundred Thirty -Seven Dollars ($7,659,437.00) (the "Housing Authority Loan") for the development of a 163-unit apartment complex located on that certain real property located in Palm Desert, California and commonly known as Hovley Gardens Apartments (the "Project"). The current principal balance of the Housing Authority Loan is approximately Six Million Two Hundred Thousand Dollars ($6,200,000.00). An affiliate of Palm Communities acts as the Administrative General Partner of the partnership. Palm Communities has requested to re -syndicate and restructure the financing of the Project to obtain a new allocation of nine percent (9%) Low Income Housing Tax Credits (the "Tax Credit Allocation") to allow for an extensive rehabilitation of the Project. Pursuant to the Resolution of the Palm Desert Housing Authority dated as of June 25, 2020, attached to this letter as Attachment 1, the Housing Authority has conditionally approved of the proposed restructuring of the Housing Authority Loan to extend the term and reduce the principal amount to the approximate amount of Five Million Two Hundred Thousand Dollars ($5.200,000.00), subject to the following: 1. Project. The Project will be operated for a period of titty-five (55) years following the date of completion of the rehabilitation of the Project to provide affordable housing to persons and households of low and very -low income in accordance with the affordability restrictions contained in the DDA and in accordance with the Low -Income Housing Tax Credit financing being used by the Project. To the extent necessary, the Housing Authority shall subordinate the deed of trust securing the Housing Authority Loan to the liens and encumbrances of the Project's construction and permanent lenders. The Housing Authority will Danavon L. Horn, President Palm Communities RESOLUTION NO. HA-97 June 25, 2020 Page 12 not subordinate its interests in the regulatory agreement currently affecting the Project to the liens or encumbrances of the Project's construction and permanent lenders. 2. Proiect Owner. The Project owner shall be a California limited partnership ("Project Owner") whose administrative general partner is either Palm Communities, or an affiliate entity of Palm Communities, or Danavon L. Horn, or an entity controlled by Danavon L. Horn. The managing general partner of the Project Owner shall be a nonprofit corporation. The Project Owner will have one or more limited partner investors selected by Danavon L. Horn. 3. Transfer of Land to Proiect Owner. Palm Communities shall convey the Project to the Project Owner in conjunction with the execution of the restructured Housing Authority Loan. 4. Housing Authority Loan Documents. The proposed restructuring of the Housing Authority Loan will be evidenced by, among other things, an amended DDA (the "Amended DDA"), and an amended promissory note, deed of trust and regulatory agreement, (collectively, the "Loan Documents"), each executed by the Project Owner and the Housing Authority where applicable. 5. Housing Authority Loan Terms. The Housing Authority Loan shall have a term of fifty-five (55) years, commencing as of the effective date of the Amended DDA and shall bear interest at the greater of (i) the current Applicable Federal Rate at the time the Amended DDA is executed by the parties, or (ii) one percent (1%) per annum. The Housing Authority Loan shall be repaid from seventy-five percent (75%) the Project's residual receipts remaining after payment of fees and expenses. The outstanding principal amount of the Housing Authority Loan shall be prepaid in the amount of One Million Dollars ($1,000,000.00) at the closing of the construction loan. 6. Annual Monitoring Fee. Commencing on the date the construction loan converts to a permanent loan, the Project Owner shall pay the Housing Authority an annual monitoring fee in the amount of Sixty -Five Thousand Dollars ($65,000.00) and shall increase at the rate of two percent (2%) annually. 7. Loan Documents. The Loan Documents, and all related documents and instruments, shall be submitted to the Housing Authority for its approval and shall be in form and substance acceptable to, and approved by, the Board of the Housing Authority and its counsel. CITY Of HUM DESERT P 6401-0001 \24 2 7158v5. d o c CJo.ian III 0 Danavon L. Horn. President Palm Communities RESOLUTION NO. HA-97 June 25, 2020 Page 3 8. Award of Tax Credit Allocation. The Project shall have been awarded the Tax Credit Allocation pursuant to an application therefor by Palm Communities to the California Tax Credit Allocation Committee and dated July 1, 2020. 9. No Third Party Beneficiaries. This letter is solely for the benefit of the Housing Authority and Palm Communities, and shall not inure to the benefit of, or be relied upon by, any other person or entity. 10. Counterparts. This letter may be executed in counterparts, with the same effect as if each counterpart were an original document. Very truly yours, Palm Desert using Authority By: !' Name: Gina Nestande Its: Executive Director AGREED BY PALM COMMUNITIES PALM COMMUNITIES By: Danavon L. Horn, President Date: , 2020 CI1Y Of PRIM DESERT P6401-0001\2427158v5. doc