REPORT TO THE CITY IN ITS CAPACITY AS HOUSING SUCCESSOR TO THE
REDEVELOPMENT AGENCY OF THE CITY OF FRESNO
AND FRESNO REVITALIZATION CORPORATION
July 16, 2020
FROM: MARLENE MURPHEY, Executive Director
SUBJECT
Title
Approve Second Amendment to the Amended and Restated Owner Participation Agreement with Broadway Plaza Family Apartments, LP relating to the residential project at 1241-1263 Broadway Mall, commonly known as Hotel Fresno
Body
RECOMMENDATION
It is recommended that the Council approve the Second Amendment to the Amended and Restated Owner Participation Owner Participation Agreement between the City of Fresno in its Capacity as Housing Successor to the Redevelopment Agency and Broadway Plaza Family Apartments, LP successor in interest to Hotel Fresno Apartments LP; and, APEC International LLC., and APEC Development LLC., (collectively APEC Affiliates) for the residential project at 1241-1263 Broadway Mall, commonly known as Hotel Fresno.
EXECUTIVE SUMMARY
On June 19, 2020, the Housing Successor Agency received correspondence from Hotel Fresno Developer, APEC International LLC. that provides a project update and requests an extension of the construction completion date from July 31, 2020, to July 31, 2021. (See Attached)
The Developer closed construction financing in June of 2019 and began construction work in July of 2019. Considerable progress has been made however due to several delays a one-year extension to obtain the occupancy permit is requested. The Second Amendment has been prepared to extend the completion date, as requested. In consideration for the extension, the loan amount committed to the Hotel Fresno project by the Housing Successor will be reduced by up to $15,000 to offset the cost incurred by the Housing Successor for the 2020-2021 Property Based Improvement District (PBID) Special Assessment on project-related property commonly referred to as the Kidney Lot.
BACKGROUND
As shown in the updated Performance and Payment Schedule in Revised Exhibit B to the Second Amendment, the Developer has completed milestones leading up to project completion. Construction financing closed in June of 2019 and construction began in July of 2019. Work that has been completed includes abatement, demolition, structural repairs and temporary fire sprinklers. Construction underway includes plumbing, electrical, metal stud framing of walls and ceilings from the first through seventh floors, window installation of floors three through six and concrete infill and steel support work.
The two primary reasons for delay as described by the Developer relate to the close of construction financing and initial construction delays. In the first instance, the Opportunity Zone Investment Funds financing (via tax credit investment) required changes to the ownership structure and revisions to the State Affordable Housing Sustainable Communities Loan and Grant Agreements. The transactional requirements delayed closing until June 2019. The initial phase of construction involving environmental remediation thus began in July (rather than December 2018 as anticipated) and the abatement work was lengthened during the busy summer season due to prior commitments by the contractors.
Pursuant to the First Amendment to the Amended and Restated Owner Participation Agreement the Developer deeded property commonly referred to as the Kidney Lot to the City in its capacity as Housing Successor. The First Amendment provides that any funds expended to remove encumbrances and clear title on the property will be deducted from the loan amount committed to the Hotel Fresno project by the Housing Successor. Upon both the issuance of a certificate of completion and the Developer closing on permanent financing, the Housing Successor will deed the property back to the Developer. Currently, the Housing Successor is charged an annual Property Based Improvement District (PBID) Special Assessment by the County of Fresno of approximately $15,000 for the Kidney Lot. In consideration for the Second Amendment extension, the Owner agrees that the loan from the Housing Successor will be further reduced by the amount of the PBID Assessment for 20/21 not to exceed $15,000.
ENVIRONMENTAL FINDINGS
This Project was previously determined to be Categorically Exempt as set forth in CEQA Guidelines Section 15331, which exempts the maintenance, repair, stabilization, rehabilitation, restoration, preservation, conservation or reconstruction of historical resources. This Amendment extends the time to complete construction but does not change the scope of the Project.
LOCAL PREFERENCE
N/A
FISCAL IMPACT
The proposed amendment allows an additional year to complete the Project but does not commit any additional funds.
Attachments:
Second Amendment to Amended and Restated Owner Participation Agreement with Broadway Plaza Family Apartments, LP
Letter dated 6-19-2020