REPORT TO THE SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF
THE CITY OF FRESNO AND THE FRESNO REVITALIZATION CORPORATION
DATE: November 20, 2014
FROM: MARLENE MURPHEY, Executive Director
SUBJECT
Title
Actions pertaining to Owner Participation Agreement:
1. Invoke Exception to Better Business Act (Requires 5 affirmative votes)
2. Approve Restated and Amended Owner Participation Agreement (OPA) between the Housing Successor of the City of Fresno and Apec LLC International for the rehabilitation of 1241 Broadway Plaza (APN 466-214-01) (City action)
Body
RECOMMENDATION
The City of Fresno as Housing Successor recommends approval of the Amended Restated Owner Participation Agreement for 1241 Broadway Plaza.
EXECUTIVE SUMMARY
The Housing Successor has an Owner Participation Agreement with Hotel Frezno LLC to rehabilitate the former Hotel Fresno into a mixed use housing and commercial development. The OPA commits $1,900,000 of low and moderate income assistance to help create affordable housing units. Apec is purchasing the property and seeks to amend the agreement that is being assigned by the owner subject to Agency approval. The amended OPA, if approved, will be the basis of a loan commitment letter utilized by Apec to pursue its financing plan.
BACKGROUND
The Housing Successor has an Owner Participation Agreement with Hotel Frezno LLC to rehabilitate the former Hotel Fresno into a mixed use housing and commercial development. The OPA commits $1,900,000 of low and moderate income assistance to help create affordable housing units.
The Hotel Fresno property at 1241 Broadway Plaza (APN 466-214-01) is in escrow between Apec International LLC and Hotel Frezno LLC. Apec is a multifamily and commercial development company with extensive experience in market rate and affordable housing.
Apec proposes to rehabilitate the subject property into 70 rental residential units consisting of 30 market rate units and 40 units covenanted for affordable housing across a broad range of income levels. The units will be a mix of one, two and three bedrooms. The ground floor will contain common area space, office space and some retail. In addition, Apec proposes to acquire, at appraised value, an adjacent Agency- owned lot (APN 466-214-17) and a small city remnant piece in order to build structured parking at the rear of the building. (See attached map).
The total project costs are estimated at $21,033,102. The financing plan envisions: $3,150,000 million from the Infill Infrastructure Grant Program (Infill Program) administered by the California Housing and Community Development Commission (HCD); $3,532,179 Permanent Conventional Loan; 8,032,891 tax credit equity from the Low Income Housing Tax Credits Program; $3,636,125 from Historic Tax credit equity; $1.9 million committed by the OPA from Housing Successor Low and Moderate Income funds; and, $781,908 in deferred development fees.
The Infill Program Grant has been announced with an application deadline of December 10, 2014. It's estimated that the award will be made in April 2015. The TCAC application round of July 1st 2015 will be pursued with the award estimated to be announced in September 2015. The Historic Tax credits will be pursued subsequent to the TCAC Application. The schedule (based on estimated TCAC and CAHCD application and award dates) is reflected in the attached performance schedule.
The OPA is being assigned to APEC by Frezno Hotel concurrent with the closing of escrow and subject to Agency approval. The escrow is conditioned upon funding commitment of the OPA as revised in the amended restated OPA. In order to pursue the financing plan and submit its application to HCD by December 10th 2014, APEC is seeking an amended OPA with the Housing Successor. The terms of the draft Restated and Amended OPA (attached) are summarized as follows:
a. Principal Amount: the principal amount of the Loan will be one million nine hundred Thousand Dollars ($1,900,000)
b. Terms of the Loan: The loan will mature fifty five years after the deed of trust is recorded.
c. Interest Rate: The loan will bear one-percent (1%) simple interest.
d. Repayment: The first annual payment date shall be May 15th of the year that is one year after the certificate of completion. The Annual Payment Date shall be May 15th of each year based upon residual receipts. At loan maturity, the entire outstanding principal and accrued interest and other amounts due to the lender under the OPA documents shall be due and payable.
e. Termination of the loan commitment: The lender reserves the right to cancel the commitment and terminate the Lender's obligation upon the occurrence of any of the following:
The borrower's failure or inability to comply with the terms or conditions of this loan commitment.
The filing by or against the Borrower of a petition in bankruptcy or insolvency or for reorganizations or the appointment of a receiver or trustee, or the making by the Borrower or any guarantor of an assignment for the benefit of creditors, or the filing of a petition for arrangement by the Borrower or any guarantor.
If Borrower fails to obtain an Infill Program commitment and fails to obtain an MHP Program commitment. However, if Borrower is successful in obtaining either an Infill Program commitment or an MHP Program commitment, then Lender cannot terminate the Commitment pursuant to this Section 29(c).
Environmental Finding
A finding of categorical exemption was made pursuant to section 15331 class 31 of CEQA guidelines for the rehabilitation of APN 466-214-01.
Attachments:
1. Map
2. Draft Amended Owner Participation Agreement