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Home My WebLink AboutConsent to the Assignment - Allied Affordable Housing LLC APN 622-020-096STAFF REPORT PALM DESERT HOUSING AUTHORITY COMMUNITY DEVELOPMENT DEPARTMENT MEETING DATE: January 9, 2020 PREPARED BY: Jessica Gonzales, Senior Management Analyst REQUEST: Consider a request by Allied Affordable Housing, LLC to approve and consent to the assignment of its interests in Ground Lease Contract No. HA34970 and that certain Regulatory Agreement and Declaration of Restrictive Covenants (recorded as Document No. 2016-0138169), and pertaining to the vacant property owned by the Authority and known as APN 622-020-096 Recommendation By Minute Motion, that the Authority Board, 1) Consider a request by Allied Affordable Housing, LLC ("Allied") to approve and consent to the assignment of its interests and obligations under that certain Ground Lease by and between Allied and the Authority dated as of January 14, 2016 (Contract No. HA 34970) ("Lease"), and that certain Regulatory Agreement and Declaration of Restrictive Covenants by and between Allied and the Authority, dated as of January 14, 2016 (recorded as Document No. 2016- 0138169) ("Regulatory Agreement"), and pertaining to the Arc Village Project and the vacant property known as APN 622-020-096; and 2) Authorize legal counsel to prepare and finalize an agreement assigning Allied's interests and obligations under the Lease, Regulatory Agreement and related documents ("Assignment"); and 3) Authorize the Chairman and/or Executive Director or his designee to take all necessary actions to affect the requested assignment, including execute the Assignment and all related and necessary documents. Strateqic Plan One of the priorities of the City of Palm Desert ("City") Envision Palm Desert Strategic Plan as part of Land Use, Housing and Open Space is to facilitate development of high quality housing for people of all income levels. This request meets that objective by diversifying the City's housing stock and pursuing development of housing for low income households. Background Analvsis On January 14, 2016 the Authority approved the Lease with Allied for the purpose of developing the Arc Village Project ("Project"), a 36 unit affordable housing project at the January 9, 2020 — STAFF REPORT Authority — Consider Approval of Consent to Assign Contract No. HA34970 Page 2 of 2 Authority owned property known as APN 622-020-096 located behind Desert Arc, 73-255 Country Club Drive. After three (3) separate attempts for tax-exempt financing with the State's Tax Credit Allocation Committee and receiving a perfect score each time, Allied was not successful in securing the original intended financing monies for the Project. Allied decided to then pursue funding from the California State Department of Housing and Community Development ("HCD") in August of 2019. Unfortunately, HCD disqualified the application submitted by Allied due to lack of site control because Allied currently owns the leasehold interest in the Lease rather than Allied Real Estate Partners, LLC (the applicant). Allied is requesting the Authority's approval and consent to Allied's assignment of its rights and obligations under the Lease and Regulatory Agreement to Allied Real Estate Partners, LLC, both wholly -owned subsidiaries of Allied Argenta, LLC ("Allied Argenta"), which controls both entities (see attached letter from Allied Argenta dated December 18, 2019). Staff has consulted with legal counsel, and such request may be considered and approved by the Authority Board. Staff considers Allied's request acceptable. Staff therefore recommends that the Authority Board approved this request and related actions in order to secure funding needed for the Project. Fiscal Analvsis There is no fiscal impact to the Authority in connection with the proposed request. There is also no impact to the General Fund. LEGAL REVIEW DEPT. REVIEW FINANCIAL REVIEW ASSISTANT CITY MANAGER Ryan Stendel L ��- Jim son Director of Communit• t Moore And Pi *estine Special Counsel Deve pment ' Director of Finance Assttatnt City Manager 01 .� �J / City Manager, Lauri Aylaian: •�1� LESEE/APPLICANT: Allied Affordab ousing, LLC ("Allied") ATTACHMENTS: Allied Affordable Housing, LLC Request (Letter dated `�YYY�hUeUS� AU Il-1fJr' o VFRIF-IED BY: P6401-0001\2372053v2.doc .7rlgm ! on rile ti,r;th C itv Clerk's O it M CS'. Horn i k,3ariloRrm, "IV, use', 9 N&*u& AKALLIEDARGENTA NJ Allred Peal Estate Partners, LLC Allred Affnrrletrle Mowry. LLC. Arfynnra Construction Group. LLC Argprita Property Manayr.men' Group. LLC December 18, 2019 Mrs. Jessica Gonzalez City of Palm Desert Palm Desert Housing Authority 73-510 Fred Waring Drive Palm Desert, CA 92260 Dear Mrs. Gonzalez, On March 1 l , 2019, the City Council approved the extension of the lease agreement and entitlements for Arc Village to secure the funding needed for the project. The team submitted a Multifamily Housing Program funding application through the California Housing and Community Development Department (HCD) August 2019 and was disqualified due to lack of site control because the lease was under Allied Affordable Housing, LLC (AAH) versus Allied Real Estate Partners, LLC (AREP, the applicant). Despite a letter from the City supporting the project and reinstating that the lease was for the development of Arc Village, and an appeal to their Threshold letter, HCD denied the appeal and disqualified the project from funding. We are asking the City of Palm Desert Housing Authority to change the lessee name from Allied Affordable Housing, LLC to Allied Real Estate Partners, LLC to seek HOME funds. Allied Real Estate Partners, LLC (AREP) and Allied Affordable Housing, LLC (AAH) are both wholly - owned subsidiaries of Allied Argenta, LLC, which controls both entities. See enclosed organizational documents. The Foundation for Affordable Housing and Allied Argenta, LLC (through Allied Real Estate Partners, organization's development arm), have been working on this project in collaboration with the City of Palm Desert for over three years. The initial ground lease, recorded on April 8, 2016, was issued to Allied Affordable Housing, LLC. The lease specifically includes language permitting assignment of the lease to an affiliate of AAH in order to finance the development with tax credits and loans. As AREP and AAH are wholly -owned subsidiaries, AAH may assign to any partnership in which an affiliate is a partner; however, for purposes of HCD they are now requiring that all site control, third party reports and application information be under the same entity. AREP will be the affiliate which holds a general partner interest in the new tax credit partnership formed for the sole purpose of owning the development. An assignment will be effectuated once the tax credit partnership has obtained the loans and low-income housing tax credits to finance the development. However, the lease will be assigned to the eventual owner, which will be a Limited Partnership, once the partnership is established and funding secured for the development of the project. The Partnership will include Allied Real Estate Partners, LLC, as indicated throughout the HOME application. Enclosed is an organizational chart demonstrating that both agencies are wholly -owned and controlled by Allied Argenta, LLC. 409 Santa Monica Blvd, Suite E www.alliedargenta.com OFFICE 310 394 9090 Santa Monica, CA 90401 FAX 310 394 3030 ALLIEDARGENTA vv Allred Real Estate Partners, LLC AlliedAffoidabin Houhrry, llC Argenta Construction Group. LLC Argrnta Properly Managrmemt Group. LLC Thank you in advance for your continuous Support, guidance, and consideration. Should you have any questions you can reach me at (310) 906 4936. Sincerely, Yvonne Delgadillo VP, Community Development 409 Santa Monica Blvd, Suite E OFFICE 310 394 9090 Santa Monica, CA 90401 www.alliedargenta.com FAX 310 394 3030 OM \ \ w \ § «®2 °$\ — '�Z- \@, §f \{ f7, _- EJ� gym/oc- - g 2 K E§ X3 \$ u±£ \ r% \� 2 w9= - />G / y%r \/ �\ /D �=J S ƒ\$ \ CD g / ƒ 17, we /yo \/// \- e7/ $ °\\ \ £