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2008/10/28 City Council Resolution 2008-171RESOLUTION NO. 2008 -171 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ROHNERT PARK, CALIFORNIA, APPROVNG THE FIRSTAMENDMENT TO THE AFFORDABLE HOUSING AGREEEMENT BETWEENTHE CITY OF ROHNERT PARK ANDWATT COMMUNITIES AT CENTRE VILLE LLC FOR THE CENTRE VILLE PROJECT WHEREAS, the City's Inclusionary Housing Ordinance requires that all new for -sale residential projects reserve a minimum of 15 percent of the total dwelling units to be affordable to low- and moderate - income households; WHEREAS, the "CentreVille Project" was approved in 2003 to allow up to 76 units on property located at the northwest corner of State Farm Drive and Padre Parkway (PL2002 -046 RZ/UP /SR); WHEREAS, Condition #4 of the Project's approval requires that at least twelve (12) of the units be reserved for sale to low- and moderate - income households for a minimum period of 30 years; WHEREAS, Condition #4 of the Project's approval further states that an affordable housing agreement shall be prepared to indicate the standards for maximum qualifying household incomes for the affordable units, the party responsible for verifying incomes, how vacancies will be marketed and sold, restrictions binding on the property upon sale or transfer, maintenance provisions, and any other information required by the City to comply with the conditions of approval for the Project; WHEREAS, on October 25, 2005 the City Council of the City of Rohnert Park adopted Resolution 2005 -319 approving an Affordable Housing Agreement with Watt Communities at CentreVille LLC for the CentreVille Project, satisfying the requirement of Condition #4 ( "Affordable Housing Agreement "); WHEREAS, the Affordable Housing Agreement requires that six (6) of the units shall be affordable to low- income households and six (6) of the units shall be affordable moderate - income households, as defined in the Affordable Housing Agreement; WHEREAS, the Affordable Housing Agreement allows Watt Communities to petition the City Council to consider an "Alternative Equivalent Action" in the event that any of the affordable units are not under sales contract within six (6) months after the issuance of a certificate of occupancy, or escrow has not closed on any of the affordable units within nine (9) months after the issuance of a certificate of occupancy; WHEREAS, Watt Communities has sold the six (6) low- income units and to date has been unable to sell any of the six (6) moderate units as each unit is sold; WHEREAS, Watt Communities has proposed an "Alternative Equivalent Action" in a letter dated September 28, 2008 which is a payment of $20,553.00 per unit to be paid through escrow to release the affordability requirements and restrictions on the six (6) moderate units at the CentreVille Project; WHEREAS, these funds will be deposited into the housing trust fund which is designated to preserve, improve and create the City of Rohnert Park's stock of affordable housing; WHEREAS, Staff has reviewed Watts' proposal dated September 28, 2008 and recommends it to be an acceptable "Alternative Equivalent Action" given the current conditions in the economy and the housing market; WHEREAS, Staff recommends that the City Council accept Watts' proposal and release the affordability requirements and restrictions on the six (6) moderate units in exchange for a $20,553.00 payment per unit; WHEREAS, the City Attorney's office has prepared a First Amendment to the Affordable Housing Agreement between the City of Rohnert Park and Watt Communities at CentreVille LLC for the CentreVille Project ( "First Amendment "); WHEREAS, Watt Communities must open escrow on any or all of the moderate units within 6 months after the execution of the First Amendment, and escrow must have closed on these affordable units within 9 months after the execution of the First Amendment for the City of Rohnert Park to accept payment to release the affordability restrictions on these six (6) moderate units; and WHEREAS, the City Council of the City of Rohnert Park has reviewed and considered the information contained in the Staff Report and relevant materials regarding the First Amendment to the Affordable Housing Agreement, between the City of Rohnert Park and Watt Communities at CentreVille LLC for the CentreVille Project. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Rohnert Park that the City Council hereby finds and determines the following: a. The alternative equivalent action will further the provision of inclusionary housing in the City to an equal or greater extent than construction of the units; b. An over - concentration of affordable housing in one area of the city will not occur; and . C. The alternative equivalent action will not financially burden the city. BE IT FURTHER RESOLVED that the City Council does hereby authorize and approve the First Amendment to the Affordable Housing Agreement between the City of Rohnert Park and Watt Communities at CentreVille LLC for the CentreVille Project. BE IT FURTHER RESOLVED that the City Manager and/or his /her designee is hereby authorized to extend the time for performance of any obligation under the First Amendment and to negotiate other, minor changes to the First Amendment, at his/her, or his/her designees, sole discretion. BE IT FURTHER RESOLVED that the City Manager and/or his/her designee is hereby authorized and directed to execute the First Amendment to the Affordable Housing Agreement between the City of Rohnert Park and Watt Communities at CentreVille LLC, and execute any future Amendments necessitated by those changes for and on behalf of the City of Rohnert Park. DULY AND REGULARLY�ADOPTED by the City Council of the City of Rohnert Park this 28t` day of October, 2008. CITY OF ROHNERT PARK ATTEST: # **I— etir '.. 119 City IFORN�ILP6 Mayor Pr empore BREEZE: AYE SMITH: NO STAFFORD: AYE VIDAK- MARTINEZ: AYE MACKENZIE: ABSENT AYES: (3) NOES: (1) ABSENT: (1) ABSTAIN: (0) FIRST AMENDMENT TO AFFORDABLE HOUSING AGREEMENT This FIRST AMENDMENT TO AFFORDABLE HOUSING AGREEMENT ( "First Amendment ") is entered into by and between THE CITY OF ROHNERT PARK, a municipal corporation ( "City "), and WATT COMMUNITIES AT CENTREVILLE LLC, a California limited liability company ( "Developer "), dated as of the date of execution of this First Amendment by City indicated on the signature page hereof ( "Effective Date "). RECITALS A. City, acting to carry out its obligations under Rohnert Park Municipal Code Section 17.07.020(N) ( "Inclusionary Ordinance "), required that Developer construct twelve (12) Affordable Units in the Project for sale to low and moderate - income households. Six (6) of the Affordable Units were to be sold by Developer to Low Income Households ( "Low Income Units ") and six (6) of the Affordable Units were to be sold by Developer to Moderate - Income Households ( "Moderate Units "). The location of the Moderate Units is identified, and more particularly described, in Exhibit A attached hereto. B. On October 25, 2005, City and Developer entered into that certain Affordable Housing Agreement ( "Original Agreement ") setting forth Developer's obligations to provide affordable housing within the Project. The Original Agreement and this First Amendment, including all exhibits, are collectively referred to herein as the "Agreement." C. As part of the affordable housing obligations under the Original Agreement, City procured assurances that the affordable housing would be sold, owned and occupied only by an Eligible Household, and would be sold only for a price that does not exceed the Affordable Sales Price pursuant to a Refinance and Resale Restriction Agreement (attached as Exhibit D to the Original Agreement) ( "Affordability Restrictions "). D. . Developer maintains that the current downturn in the real estate market has made the sale of the Moderate Units economically infeasible. Thus, Developer has proposed an "alternative equivalent action" with regard to the Moderate Units which would allow Developer to provide a release payment per unit in exchange for the release of the Affordability Restrictions placed on the remaining Moderate Units. Such release payment would be deposited into the City's Housing Trust Fund. E. Developer has constructed and marketed the Affordable Units for sale to Eligible Households within the last two (2) years. The Low Income Units have all sold to Low Income Households. However, Developer has been unsuccessful in selling the Moderate Units. F. Pursuant to the City's Inclusionary Ordinance and Section 1.3 of the Original Agreement, Developer may propose an "alternative equivalent action" which will further affordable housing opportunities in the City to an equal or greater extent than compliance with the express requirements of Inclusionary Ordinance subsection 4.a, and that an over concentration of affordable housing in one area will not occur. 1139620v1A 80078/0022 G. City has determined that Developer's proposed "alternative equivalent action" will further affordable housing opportunities in the City to an equal or greater extent than compliance with the express requirements of Inclusionary Ordinance subsection 4.a, and that an over concentration of affordable housing in one area will not occur. H. City and Developer have reached mutual agreement and desire voluntarily to enter into this First Amendment to set forth the terms of the alternative equivalent action, subject to the conditions and requirements set forth herein. AGREEMENT NOW, THEREFORE, in consideration of the foregoing recitals and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, City and Developer hereby agree as follows: 1. Recitals; Capitalized Terms; Exhibits. The foregoing recitals are incorporated'by reference into this First Amendment. Capitalized terms used herein, and not otherwise defined, shall have the meanings given to such terms in the Original Agreement. All exhibits attached hereto are incorporated by reference as though fully set forth herein. 2. Release of Affordability Restrictions on Moderate Units. Upon satisfaction of the terms and conditions of this First Amendment and in particular this Section 2, City will release the Affordability Restrictions as to each Selling Moderate Unit (defined below) for which Escrow has closed in exchange for $20,553 per unit (each a "Unit Release Payment ") to be paid to City through Escrow (defined below), for a total of $123,318. (a) Developer's Obligation to Open Escrow. As to each Moderate Unit, within six (6) months of the Effective Date, Developer shall open an escrow account ( "Escrow ") with a title company ( "Title Company" or "Escrow Officer "). Moderate Units for which an Escrow has been established with a Title Company shall be referred to herein as "Selling Moderate Units." In the event Developer has not opened Escrow for a Moderate Unit for any reason whatsoever, this First Amendment shall automatically terminate as to that particular Moderate Unit, and following such termination the Affordability Restrictions set forth under the Original Agreement shall continue to apply to that Moderate Unit including any sale thereof, regardless of when occurring. (b) Developer's Obligation to Close Escrow. As to each Selling Moderate Unit, within nine (9) months of the Effective Date, Close of Escrow shall have occurred on the Sale Transaction. "Sale Transaction" means entry by Developer and a bonafide purchaser into a valid purchase and sale agreement for a particular Moderate Unit. If Developer has not closed Escrow on a Sale Transaction for a Moderate Unit for any reason whatsoever, this First Amendment shall automatically terminate as to that particular Moderate Unit, and following such termination the Affordability Restrictions set forth under the Original Agreement shall continue to apply to that Moderate Unit including any sale thereof, regardless of when occurring. 2 1139620v1A 80078/0022 3. Escrow Instructions. (a) "Close of Escrow" means (i) the consummation of the Sale Transaction for each Selling Moderate Unit, (ii) payment of the Unit Release Payment to City for each Selling Moderate Unit., and (iii) recordation and delivery of the Quitclaim Deed. (b) Closing Date. Close of Escrow will occur no later than nine (9) months after the Effective Date. The "Closing Date" shall mean the date on which Close of Escrow occurs. (c) Developer Deposit of First Amendment into Escrow. Within five (5) days of opening Escrow for the sale of a Selling Moderate Unit, Developer shall deliver into Escrow a true and correct copy of this First Amendment. Within three (3) business days after receipt of this First Amendment, the Title Company shall execute a "Consent by Title Company" attached hereto as Exhibit C, and shall notify the parties of the date of such receipt. (d) City Deposit of Quitclaim Deed into Escrow. Prior to Close of Escrow for each Selling Moderate Unit, City shall deliver into Escrow an executed and acknowledged quitclaim deed ( "Quitclaim Deed ") in a form of Exhibit B attached hereto, which quitclaims any and all interest in the Original Agreement recorded against the applicable Selling Moderate Unit. City shall not deposit any funds into Escrow. Funds for the Unit Release Payment applicable to each Selling Moderate Unit will come from proceeds of the Sale Transaction. Developer must deposit any additional funds into Escrow as are necessary to satisfy the Unit Release Payment for each Selling Moderate Unit. Developer and /or the purchaser of the Selling Moderate Unit shall deposit any additional funds into Escrow as are necessary to close the Sale Transaction. City reserves the right to withdraw any and all documentation submitted into Escrow at any time prior to Close of Escrow. The delivery of documents into Escrow in no way binds City. Developer shall bear all costs and expenses of each Sale Transaction and each Escrow including, but not limited to, any applicable transfer taxes and recordation fees. (e) Further Deposits into Escrow. City and Developer shall each deposit such other instruments as are reasonably required by Escrow Officer or otherwise required to release the Moderate Units of any Affordability Restrictions placed thereon in accordance with the terms hereof. City and Developer agree to execute such reasonable additional and supplementary escrow instructions as may be appropriate to enable Escrow Officer, to comply with the terms of this First Amendment provided, however, that in the event of any conflict between the provisions of this First Amendment and any supplementary escrow instructions, the terms of this First Amendment shall control. (f) Conditions to Close of Escrow. As to each Sale Transaction, Close of Escrow for each Selling Moderate Unit shall be conditioned upon the Escrow Officer's fulfillment of the following in the manner hereinafter specified: (i) Escrow Officer is unconditionally and irrevocably committed to comply with these instructions and otherwise in the manner and within the time limits herein specified, and nothing contained in these escrow instructions or instructions provided by any 3 1139620v1A 80078/0022 other party to this Escrow authorize or require Escrow Officer to take any actions that would conflict with or prevent him/her from complying with the terms of these instructions. (ii) Escrow Officer shall be in a position to disburse to City the Unit Release Payment for each Selling Moderate Unit in accordance with the Closing Statement (defined below). Each Unit Release Payment shall be paid to City through Escrow. (iii) Escrow Officer shall have received: a. All documents referenced in Subsections 4.c and 4.d; and b. From Developer and /or the purchaser of the Selling Moderate Unit, all closing funds, including those shown on the Closing Statement (defined below). (iv) Escrow Officer shall have, as applicable, inspected all submitted documents to ensure that they are complete (with all exhibits attached and all blanks filled in), fully signed, and acknowledged as applicable. (v) Escrow Officer shall have executed and returned to City and Developer the Consent by Title Company attached hereto as Exhibit C. (vi) Escrow Officer shall have prepared and delivered to City and Developer a preliminary closing statement of the Sale Transaction, reflecting that the full amount of the Unit Release Payment for the applicable Selling Moderate Unit is to be paid to City, and showing all other escrow disbursements and recipients thereof, as approved in writing by City and Developer ( "Closing Statement "). Upon approval of such Closing Statement, Escrow Officer shall telephonically advise City and Developer of any change therein and receive telephonic approval of any such change. If such approval is not obtained, Escrow Officer is not authorized to close Escrow. (vii) Escrow Officer shall have telephonically advised City and Developer that all of the foregoing conditions have been fulfilled and that Escrow Officer is in a position to close Escrow in accordance with these instructions, and that no contrary demands or instructions inconsistent with those herein contained have been given to Escrow Officer. Escrow Officer shall not close Escrow until having given such telephonic confirmation and having received from City and Developer final telephonic permission to close the Sale Transaction hereunder. (g) Close of Escrow Procedures. As to each Sale Transaction, when Escrow Officer has received the items referenced in Subsections 4.c and 4.d above, and are in a position to comply with Subsection 4.f above, then Escrow shall close by the following steps in the manner and in the order hereinafter specified: (i) Escrow Officer shall confirm closing of the Sale Transaction. (ii) Escrow Officer shall pay to City the full amount of the Unit Release Payment for each Selling Moderate Unit by wire or through other methods, and confirm 4 11396200A 80078/0022 with City that payment is received in full. It is the express instruction of City that the full amount of the Unit Release Payment be disbursed to City concurrently with the close of escrow. (iii) Escrow Officer shall record the Quitclaim Deed in the Official Records of Sonoma County, California. 4. Authorily of City Manager. Notwithstanding any provision herein to the contrary, the City Manager, or his or her designee, shall have the right and authority to, at his or her sole discretion, (i) extend the time for performance of any obligation hereunder, including satisfaction of any time frames specified in Section 2; and (ii) negotiate other, minor changes to this First Amendment, at his or her sole discretion. 5. Miscellaneous. City and Developer acknowledge and agree that, except as amended by this First Amendment (including the exhibits attached hereto), the Original Agreement remains unmodified and in full force and effect in accordance with their respective terms, which are incorporated herein by this reference. This First Amendment and the Original Agreement contain the entire and final agreement between the parties hereto and supersede all other agreements, oral or otherwise, regarding the subject matter hereof. This First Amendment is made and entered into in the State of California and shall be interpreted, construed and enforced in accordance with the laws of the State of California without reference to its choice of laws rules. If any provision of this First Amendment is declared invalid or is unenforceable for any reason, that provision shall be deleted from the document and shall not invalidate any other provision contained in the First Amendment. The word "including" shall be construed as if followed by the words "without limitation." This First Amendment shall be interpreted as though prepared jointly by both parties. Nothing contained herein nor any acts of the parties hereto shall be deemed or construed by the parties hereto, nor by any third parry, as creating the relationship of principal and agent or of partnership or of joint venture by the parties hereto. Nothing herein is intended to create any third party benefit. Each individual or entity executing this First Amendment on behalf of Developer represents and warrants that he or she or it is duly authorized to execute and deliver this First Amendment on behalf of Developer and that such execution is binding upon Developer. [signatures follow on next page] 1139620v1A 80078/0022 IN WITNESS WHEREOF, City and Developer have executed this First Amendment as set forth below. Dated: Dated: "Effective Date" ATTEST: City Clerk APPROVED AS TO FORM: Causr City Aorney 6 11396200A 80078/0022 WATT COMMUNITIES AT CENTREVILLE LLC, a California limited liability company By: Watt Developers LLC, a California limited liability company dba Watt Communities Its: Sole Member By: Jeffrey B. Lawrence Its: Senior Vice President "DEVELOPER" THE CITY OF ROHNERT PARK, a municipal corporation By: Name: Its: "CITY" Exhibit A Legal Description of Moderate Units Moderate Income Affordable Units: Units U63, U66, U69, U71, U73 Condominium Plan for Parcel C of subdivision map entitled "City Center December 9, 2004, in Book 670 of Maps, at Pages 19 through 23, inclusive, Records. lCitY staff to confirm accuracy of legal descraption 1139620AA 80078/0022 and U74 within Town Homes," Sonoma County Recording Requested By And When Recorded Mail To: Exhibit B Form of Quitclaim Deed (Space Above This Line for Recorder's Use Only) QUITCLAIM DEED FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, THE CITY OF ROHNERT PARK, a municipal corporation, hereby REMISES, RELEASES AND FOREVER QUITCLAIMS to WATT COMMUNITIES AT CENTREVILLE LLC, a California limited liability company, that property in Sonoma County, State of California, described in "Attachment No. 1" attached hereto and made a part hereof. THIS DEED IS GIVEN TO RELEASE ANY AND ALL RIGHTS BY THE CITY OF ROHNERT PARK AS THEY RELATE TO THAT CERTAIN AFFORDABLE HOUSING AGREEMENT BY AND BETWEEN THE C ITY OF ROHNERT PARK, A MUNICIPAL CORPORATION, AND WATT COMMUNITIES AT CENTREVILLE LLC, A CALIFORNIA LIMITED LIABILITY COMPANY, RECORDED NOVEMBER 21, 2005, SERIES NO. 2005- 172702, SONOMA COUNTY RECORD. City of Rohnert Park: By: Print Name: Its: 2 1139620v1A 80078/0022 Attachment No. 1 LEGAL DESCRIPTION OF PROPERTY -1- 1139620v1A 80078/0022 Exhibit C Consent by Title Company By executing this consent where indicated below, you irrevocably and unconditionally agree to act as escrow agent with respect to (1) the Quitclaim Deed being deposited with you by City and (2) disbursement of the Unit Release Payment for each Selling Moderate Unit to City pursuant to the First Amendment. You further agree to hold any such Quitclaim Deed and disburse the Unit Release Payment in accordance with these instructions. If this escrow has not closed within nine (9) months of the Effective Date of the First Amendment, these instructions shall be automatically revoked. In that case, please immediately telephone the undersigned for further instructions. I acknowledge receipt of this First Amendment, and agree to act as escrow agent in this transaction strictly in accordance with the foregoing instructions. TITLE COMPANY By: Name: Title: Title Company: Dated -1- 1139620v1A 80078/0022