2013/03/26 City Council Resolution 2013-055RESOLUTION NO. 2013 -055
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ROHNERT PARK
AUTHORIZING AND APPROVING EXECUTION OF AN ASSIGNMENT AND
ASSUMPTION AND SECOND LOAN MODIFICATION AGREEMENT AND
CERTIFICATION BETWEEN THE CITY, EAST COTATI AVENUE
PARTNERS AND TOWER 2 APARTMENTS L.P., TO EFFECTUATE THE
TRANSFER AND REHABILITATION OF TOWER APARTMENTS
WHEREAS, on January 10, 2012, the City of Rohnert Park ( "City") elected to retain the
housing assets and functions previously held and performed by the Community Development
Commission of the City of Rohnert Park (formerly known as the "Community Development
Agency of the City of Rohnert Park"); and
WHEREAS, pursuant to Resolution 1991 -06 adopted on February 26, 1991, the
Community Development Agency of the City of Rohnert Park ( "CDA ") made a loan to Burbank
Housing Development Corporation ( "BHDC'') in the amount of three hundred, ninety thousand
dollars ($390,000), which was assigned to East Cotati Avenue Partners, a California limited
partnership ( "East Cotati") and was documented in a Deed of Trust and Promissory Note ("Loan
Documents "); and
WHEREAS, the loan proceeds were used to purchase the land on which the Tower
Apartments low income housing project was constructed; and
WHEREAS, the Tower Apartments were built by Burbank Housing in 1992 using CDA
low and moderate housing funds, Sonoma County funds, Low Income Housing Tax Credits
( "LIHTC "), and State funds; and
WHEREAS, the project, which has successfully provided 50 units of quality affordable
housing since 1992, is now in need of rehabilitation; and
WHEREAS, in July 2012, Burbank Housing successfully applied for and will receive a
second allocation of LIHTC of approximately four million, five hundred thousand dollars
($4,500,000) to fund the rehabilitation; and
WHEREAS, in order to use the tax credits, a new ownership entity (Tower 2 Apartments,
L.P.) was formed naming Burbank Housing as general partner and Wells Fargo Bank as limited
partner ("Tower 2 Apartments "); and
WHEREAS, Wells Fargo Bank will fund the construction loan and provide equity in
exchange for the tax credits; and
WHEREAS, as a result of the change in ownership, the City is requested to consent to the
assignment of its loan documents from East Cotati to Tower 2 Apartments; and
WHEREAS, in order to meet California Tax Allocation Credit Committee ( "CTCAC ")
requirements for tax credits, comply with Well Fargo Bank lending requirements, and
incorporate the new ownership entity into the existing loan documents, the City is also being
requested to modify the Loan Documents, as previously modified in 1993, to, among other
things, extend the term from 2012 to 2069; and
WHEREAS, approval of the Assigmnent and Assumption and Second Loan Modification
Agreement and Certification will allow the financing, transfer and rehabilitation of Tower
Apartments to move forward.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Rolmert
Park that it does hereby approve and authorize the execution of an Assignment and Assumption
and Second Loan Modification Agreement and Certification between the City, East Cotati
Avenue Partners, a California Limited Partnership and Tower 2 Apartments, L.P., a California
Limited Partnership, in the form attached hereto as Exhibit A, with minor modifications that may
be approved by the City Manager in consultation with the City Attorney.
BE IT FURTHER RESOLVED that the City Manager is hereby authorized and directed
to take all actions to effectuate the transfer from East Cotati to Tower 2 Apartments and the
rehabilitation of Tower Apartments by Tower 2 Apartments, including without limitation to
execute subordination agreements as required by the senior lenders and any other documents
required to close the transaction.
DULY AND REGULARLY ADOPTED this 26'x' day of March, 2013.
CITY OF ROHNERT PARK
Pam Stafford, Mayor
ATTEST:
` ._ -)—�F es
oAnne Buergler, City Clerk
Attachments: Exhibit A Assignment and Assumption and Second Loan Modification Agreement
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2013 -053
(2)
Exhibit A
RECORDING REQUESTED BY:
North American Title Company
Escrow /Order Number 56103- 1151986 -12
AFTER RECORDING RETURN TO:
Tower 2 Apartments, L.P.,
c/o Burbank Housing Development Corporation
790 Sonoma Avenue
Santa Rosa, CA 95404
SPACE ABOVE RESERVED FOR RECORDER
ASSIGNMENT AND ASSUMPTION AND
SECOND LOAN MODIFICATION AGREEMENT AND CERTIFICATION
(City of Rohnert Park)
(Tower Apartments)
ASSIGNMENT AND ASSUMPTION AND
SECOND LOAN MODIFICATION AGREEMENT AND CERTIFICATION
(City of Rohnert Park)
(Tower Apartments)
This ASSIGNMENT AND ASSUMPTION AGREEMENT AND SECOND LOAN
MODIFICATION AGREEMENT AND CERTIFICATION (this "Agreement ") is entered
into as of March 27, 2013, by and among the City of Rohnert Park (the "City" or "Lender "), a
municipal corporation, Tower 2 Apartments, L.P., a California limited partnership (the
"Partnership ") and East Cotati Avenue Partners, a California limited partnership ( "Assignor ").
RECITALS
A. Assignor is the fee owner of the improved real property located at 781 East Cotati
Avenue, Rohnert Park, California described on Exhibit A attached hereto (the "Property ").
B. The Community Development Agency of the City of Rohnert Park ( "Agency ")
made a loan to Assignor's predecessor, Burbank Housing Development Corporation
( "BHDC ") in the original principal amount of $390,000 (the "Loan "). The Loan is evidenced
by the following documents which, together with all other documents evidencing the Loan, as
such documents may subsequently be amended, are referred to collectively as the "Loan
Documents ":
1. A Promissory Note dated August 23, 1991 made by BHDC to the order of
Lender ( "Note ");
2. A Deed of Trust dated August 23, 1991, recorded in the Official Records of
Sonorna County ( "Official Records ") on September 6, 1991, as Instrument
No. 1991- 89055;
3. An Assignment Agreement (unrecorded) dated August 25, 1992; and
4. A Modification to Note and Deed of Trust dated December 1, 1993, between
Lender and Assignor, recorded in the Official Records on March 16, 1994, as
Instrument No. 1994 - 0035573 ( "1993 Modification Agreement ").
C. In accordance with sections 341710) and 34176 of the California Health and
Safety Code and City of Rohnert Park Resolution No. 2012 -10, the City determined to serve as
the Successor Agency to the Agency and elected to retain the housing assets and functions of the
Agency. Therefore, the City is the successor -in- interest to the Agency's rights under the Loan.
D. Concurrently herewith, Assignor is selling and transferring the Property to the
Partnership. hi connection with the sale and transfer of the Property, Assignor desires to assign
all of its right, title and interest in and to the Loan Documents to the Partnership, and the
Partnership desires to assume all of Assignor's right, title and interest in and to the Loan
Documents, subject to Lender's consent below.
2
E. Tower 2 Apartments LLC ( "General Partner "), a California limited liability
company, as the sole general partner of the Partnership, and Burbank Housing Communities
Corporation, a California nonprofit public benefit corporation, as the limited partner ( "BHCC" ),
executed that certain Agreement of Limited Partnership of the Partnership, dated as of January 5,
2013. Concurrently herewith, BHCC will withdraw from the Partnership and Wells Fargo
Affordable Housing Community Development Corporation (the "Limited Partner ", and
together with the General Partner, the "Partners ") is being admitted to the Partnership as the
limited partner pursuant to the Partnership's First Amended and Restated Agreement of Limited
Partnership (the "Partnership Agreement ").
F. The Partnership and the Partners have requested that the Lender execute and
deliver this Agreement. The Lender understands and by entering this Agreement acknowledges
that the Partnership and the Partners will be relying upon the information and agreements
contained in this Agreement.
NOW THEREFORE, in consideration of the foregoing, of the mutual promises of the
parties hereto and for other good and valuable consideration the receipt and sufficiency of which
are hereby acknowledged, the Lender, Assignor, and the Partnership mutually agree as follows:
1. Assignment by Assignor. Assignor hereby assigns to the Partnership all of
Assignor's right, title, and interest in and obligations under the Loan and the Loan Documents.
2. Acceptance of Assignment and Assumption by Partnership. The Partnership
accepts the above assignment of Assignor's right, title and interest in, and assumes all
obligations under, the Loan and the Loan Documents, and agrees to perform all of Assignor's
obligations and covenants under the Loan and the Loan Documents as if the Partnership were
the original signatory thereto.
3. Representations.
a. Assignor and the Partnership each represents and warrants that it is a duly
formed, validly existing limited partnership in good standing under the laws of
the State of California, and has the power and authority to execute this
Agreement and perform its respective obligations hereunder.
b. Assignor represents and warrants that it has not previously assigned, pledged,
hypothecated or otherwise transferred any of its rights or obligations under
the Loan Documents.
4. Lender Consent. The Lender hereby consents to the assignment to and
assumption of Assignor's rights and obligations under the Loan and the Loan Documents by
the Partnership. From and after the Effective Date, the Lender releases Assignor from its
obligations under the Loan Documents and agrees to look solely to the Partnership for the
performance of Assignor's obligations under the Loan Documents.
3
5. Certifications. The Lender and the Partnership agree and certify that the Loan
Documents are in full force and effect and, except to the extent amended or modified by this
Agreement, have not been amended or modified. As of June 30, 2012, the outstanding balance of
the Loan is $1,040,000.00, and any amounts currently due and payable to the Lender under the
Loan Documents have been paid, and the parties are not aware of any uncured default under the
Loan Documents. The Lender represents that the Loan was not funded with the proceeds of any
tax exempt bonds.
6. Modifications to Loan. In connection with the sale of the Property to the
Partnership, the terms of the Loan are being modified as set forth below, which modification for
federal income tax purposes shall be treated as a separate transaction taking place immediately
prior to the sale of the Property to the Partnership:
a. The maturity date of the Loan is extended until July 16, 2069.
b. The first sentence of Section 7 of the Note is deleted and shall be replaced
with the following:
"Notwithstanding anything to the contrary in the Loan Documents, prior to the
maturity date of the Loan, the Partnership shall only be required to make
payments on the Loan in accordance with the procedures set forth below,
unless such repayment requirements are waived by the Lender in its sole and
absolute discretion. Consistent herewith, the clause in the introductory
paragraph of the Note that reads "... said interest payable concurrently with
above principal payment, on or before August 23, 2012" is hereby deleted.
"Surplus Cash" Payments. If there is "Surplus Cash" from the Property as
defined below, the Partnership shall be entitled to retain fifty percent (50 %) of
such Surplus Cash. The remaining fifty percent (50 %) of the Surplus Cash
shall be used to repay the Loan in accordance with the following paragraphs.
"Surplus Cash" means the excess of the annual operating income of the
Property owned and operated by the Partnership on the Property (but not
including interest income earned on tenant security deposits and reserve
accounts) over the "Annual Expenses" of the Property, all as determined by
the annual audit and furnished by a qualified accountant.
"Annual Expenses" shall mean the actual, reasonable and customary costs,
fees and expenses directly attributable to the operation, maintenance, and
management of the Property, deposits to reserves, deferred developer fee
payments, payments of asset management or partnership management fees to
the Partners of the Partnership (or the Partnership itself in the absence of a
partnership) in the maximum aggregate annual cumulative amount of $30,000,
increasing by 3% each year, repayment of loans made by the Partners of the
Partnership, and payments to the Limited Partner of the Partnership required
as a result of shortfall in the tax credits, all as determined in accordance with
generally accepted accounting principles.
M
Any allowable Annual Expenses incurred which could not be included due to
insufficient annual operating income during a given fiscal year (or calendar
year if applicable), shall be accrued, carried over and allowed as deductions in
the Surplus Cash calculation for later fiscal years (oar calendar year if
applicable) in which there is sufficient operating income.
Surplus Cash payments shall be paid once a year one hundred twenty (120)
days after the end of the fiscal year (or calendar year if applicable) for the
prior fiscal year (or calendar year if applicable). If there are any later
revisions or adjustments which increase the amount due hereunder, payments
for same shall be due and payable within ten (10) days after the Partnership is
notified of the adjustments.
If any other lender requires payment of a portion of "residual receipts" or out
of "surplus cash" (hereinafter a "Surplus Cash Lender "), the amount payable
to the Lender will equal a prorated share of the available 50% portion of the
"Surplus Cash" between itself and the other Surplus Cash Lenders. The
Lender's share shall be that amount which is derived by multiplying the
available Surplus Cash as defined above, by that amount which is derived by
multiplying the available Surplus Cash times a fraction, the denominator of
which is the sunn of all the original principal amounts of the loans of the
Surplus Cash Lenders and the Loan, and the numerator of which is the
original principal amount of the Loan.
Notwithstanding anything in the Loan Documents to the contrary, the City
agrees that any Surplus Cash generated prior to the repayment of the Wells
Fargo Bank construction loan may be used to pay development costs or fund
reserves related to the Project."
c. Section 1.03 of the 1993 Modification Agreement shall be amended and
restated in its entirety as follows:
"The Lender shall give Limited Partner a copy of any written notices provided
to the Partnership under any of the Loan Documents. Any cure period
provided to the Limited Partner in the Loan Documents shall commence on
the date a copy of any notice of default is provided to the Limited Partner. All
notices required to be given to the Limited Partner under the Loan Documents
shall be in writing and sent to the addresses set forth below (or such other
address designated in a mariner provided herein) and given in the manner
provided in the Loan Documents.
Wells Fargo Affordable Housing
Community Development Corporation
MAC D1053 -170
301 South College Street, 17 °' Floor
Charlotte, NC 28202 -6000
Attention: Director of Asset Management
67
with copies to:
Joel Hjelmaas, Counsel
Wells Fargo Bank, N.A.
MAC X2401 -06T
1 Home Campus, 6th Floor
Des Moines, IA 50328 -0001
and
Craig A. deRidder, Esq.
Pillsbury Winthrop Shaw Pittman LLP
2300 N Street, NW
Washington, DC 20037"
d. Section 2.04 of the Modification Agreement shall be amended and restated in
its entirety as follows:
"Notwithstanding the above provisions, the Lender hereby pre - approves any
transfers made pursuant to that certain Right of First Refusal, Purchase Option
and Put Right Agreement by and between the Limited Partner and the General
Partner dated as of March 1, 2013. Further, the following changes of
ownership in the Partnership shall be permitted without the consent of the
Lender: (1) the transfer of the partnership interest in the Partnership by the
Limited Partner; and (ii) the transfer of any direct or indirect ownership
interests in the Limited Partner."
7. This Agreement is made for the benefit of Partnership and the Partners and any
permitted successors and assigns of the Partners under the Partnership Agreement.
8. Except as modified by this Agreement, the Loan Documents shall remain
unmodified and in full force and effect.
9. The terns of this Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns.
10. If any provision of this Agreement is determined to be unenforceable for any
reason, it shall be adjusted rather than voided, to the greatest extent possible, to achieve the
intent of the parties. All of the other provisions shall be deemed valid and enforceable to the
greatest extent possible.
11. This Agreement may be executed in counterparts, and each shall constitute an
original and all taken together shall constitute one Agreement.
A
WHEREAS, the parties to this Agreement have executed it as of the date set
forth above.
CITY: CITY OF ROHNERT PARK, a municipal corporation
IN
ATTEST:
JoAnne Buergler, City Clerk
Gabriel A. Gonzalez
City Manager
APPROVED AS TO FORM:
City Attorney
PARTNERSHIP: TOWER 2 APARTMENTS, L.P.,
a California limited partnership
By: Tower 2 Apartments LLC,
a California limited liability company,
its general partner
By: Burbank Rousing Development Corporation,
a California nonprofit public benefit corporation,
its sole memberfmanager
By:
Charles A. Cornell
Executive Director
ASSIGNOR: EAST COTATI AVENUE PARTNERS.,
a California limited partnership
By: Burbank Rousing Development Corporation, a California
nonprofit public benefit corporation, its General Partner
By:
Charles A. Cornell
Executive Director
EXHIBIT A
LEGAL DESCRIPTION
Real property in the City of Rohnert Park, County of Sonoma, State of California, described as
follows:
LOTS 10 AND 11 OF RANCHO COTATI SUBDIVISION NO. 11, AS RECORDED IN BOOK 25 OF
MAPS AT PAGE 4 OF THE OFFICIAL RECORDS OF SONOMA COUNTY, CALIFORNIA.
EXCEPTING THE FOLLOWING DESCRIBED PORTION OF LOT 11:
BEGINNING AT THE NORTHWESTERLY CORNER OF SAID LOT 11; THENCE NORTH 621 07'
EAST, 100 FEET; THENCE SOUTH 27° 53' EAST, 50 FEET; THENCE SOUTH 621 07' WEST, 100
FEET THENCE NORTH 270 53' WEST, 50 FEET TO THE POINT OF BEGINNING.
ALSO EXCEPTING THEREFROM THAT PORTION CONTAINED IN THE DEED FROM BEN
ORETSKY AND PAUL V. WRIGHT TO THE COUNTY OF SONOMA, A POLITICAL SUBDIVISION
DATED SEPTEMBER 7, 1965 AND RECORDED OCTOBER 11, 1965 IN LIBER 2151 OF OFFICIAL
RECORDS, PAGE 770, RECORDER'S SERIAL NO. J- 65860, SONOMA COUNTY RECORDS.
ALSO EXCEPTING THEREFROM THAT PORTION CONTAINED IN THE DEED FROM COTATI
AVENUE DORMITORIES, INC., A CORPORATION, TO THE CITY OF ROHNERT PARK, A
MUNICIPAL CORPORATION, RECORDED JANUARY 20, 1970 IN BOOK 2440 O.R., Page 746
Serial No. L- 49458, SONOMA COUNTY RECORDS.
APN: 143- 071 -046
State of California
County of
On before me
Date
personally appeared
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is /are
subscribed to the within instrument and acknowledged to me that he /she /they executed the same in
his /her /their authorized capacity(ies), and that by his /her /their signature(s) on the instrument the person(s),
or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Place Notary Seal Above
State of California
County of
On before me
Date
personally appeared
Signature of Notary Public
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is /are
subscribed to the within instrument and acknowledged to me that he /she /they executed the same in
his /her /their authorized capacity(ies), and that by his /her /their signature(s) on the instrument the person(s),
or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Place Notary Seal Above
Signature of Notary Public