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HomeMy WebLinkAboutPR 13405 SUNSET WAY APART.interoffice MEMORANDUM To: Mayor, City Council, and City Manager From: Mark T. Sokolow, City Attorney ~ ~ Date: January 27, 2006 Subject: P. R. 13405 Council Meeting January 31, 2006 Attached is P. R. No. 13405 approving the application for housing tax credits as it pertains to the Sunset Way Apartments which will be located at Central Mall Drive and Oakmont Drive, and approving an incentive agreement thereon. MTS:gt Attachment cc: VIA FACSIMILE (512) 306-9010 Mr. John O. Boyd, Vice President REALTEX DEVELOPMENT CORPORATION z .pr13405 .memo P. R. No. 13405 01/27/06 gt RESOLUTION NO. A RESOLUTION APPROVING THE APPLICATION FOR HOUSING TAX CREDITS BY SUNSET WAY LIMITED PARTNERSHIP AS IT PERTAINS TO THE PROPOSED SUNSET WAY APARTMENT COMPLEX TO BE LOCATED AT CENTRAL MALL DRIVE AND OAKMONT DRIVE AND APPROVING AN INCENTIVE AGREEMENT WHEREAS, Sunset Way Limited Partnership is making an application for Housing Tax Credits with the Texas Department of Housing and Community Affairs; and, WHEREAS, Sunset Way Limited Partnership will be applying for Housing Tax Credits from the Texas Department of Housing and Community Affairs (TDHC) in order to build a 96 unit apartment complex at Central Mall Drive and Oakmont Drive, as outlined in the letter attached hereto as Exhibit ~A"; and WHEREAS, TDHCA requires the express approval of the governing body of the City in order for the Applicant to be awarded an allocation of low income housing tax credits by TDHCA; and WHEREAS, the project will be of benefit to the residents of the City of Port Arthur; and WHEREAS, the City Council deems it in the best interests of the citizens to allow the Housing Tax Credit application of Sunset Way Limited Partnership to proceed. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PORT ARTHUR, TEXAS~ Section 1. That the facts and opinions in the preamble are true and correct. z.pr13405 Section 2. That the City hereby supports the project and allocation of iow income housing tax credits for the Development. Section 3. That the City acknowledges that this resolution shall constitute a written statement of support for the Development as required by Section 50.8 of the Qualified Allocation Plan and Rules adopted by TDHCA. Section 4. That the applicant shall deliver to the City a full copy of the application. Section 5. That the applicant shall comply with all City resolutions, City ordinances, and state law. Section 6. That this resolution is contingent on the complex and improvements remaining taxable. Section 7. That Sunset Way Limited Partnership shall sign the Resolution agreeing to the terms hereof. Section 8. That the City Manager is herein authorized to sign an incentive agreement in substantially the same form as attached herein as Exhibit ~B". Section 9. That a copy of this Resolution shall be delivered to the Texas Department of Housing and Community Affairs, 221 East 11th Street, Austin, TX 78701, upon approval the City Council. Section 10. That a copy of the caption of this Resolution be spread upon the Minutes of the City Council. READ, ADOPTED AND APPROVED on this __ day of , A.D., 2006, at a Regular Meeting of the City Council of the City of Port Arthur, Texas, by the following vote: AYES: Mayor z.pr13405 Councilmembers ' ; NOES: MAYOR ATTESTs CITY SECRETARY APPROVED AS TO FORM: CITY ATTORNEY APPROVED FOR ADMINISTItATION: CITY MANAGER A~REED SUNSET WAY LIMITED PARTNEKSHIP DATEs z .pr13405 EXHIBIT "A" z.pr13405 Development, C, oepor~ti~n Mr. Steve Fitzgibbons City Manager Ci~ ofPo~ A~hur PO Box 1089 Po~ A~hur, TX 77641 RE: Oppo~nities for the development of new affordable housing throu~ the ~ousing T~ C~dit ~TC) Program; Sun~t Way A~en~; Two Times ~ Capi~ Resolution Dew Mr. Fitzgibbons, We are plea~d to info~ you that Suns~ Way. Ltd h~ made application ~o the Texas Dep~ent of Rousing and Communi~ Affairs for the utili~tion of ~ousing T~ C~dits to promote the development of 96 units of mulfifamily affordable housing in your community. The proposed development will ~ known ~ fl~e Sunset Way Apa~ents and will ~ located ~ Cen~al Mall Drive and Oakmont Drive. By way of in~oduction, Realtex Developm~t Corpor~ion is ~e Managing Member of thc Suns~ Way limited pain,ship which is the appli~nt of the pm~sed d~elopm~t. R~ltex and its a~liat~ p~erships have su~s~lly created over 2,000 unJ~ of multi~mily housing in Te~s and the southwest since 1998, the majofi~ of which include Housing Tax Cmdi~ and oth~ affordable housing initiatives. I am al~ Managing Mem~r of fl~e Gateway Vill~e Seniors Apas'tments loe~ed at 2825 South 12th St~t in Beaumont. We am ex~emely proud of the elderly housing that we provide and welcome your visit ~d investigation of our a~ent eommuniW. ] think that our experience in providing HTC units in your ~on will ~ of ~at value ~ we move fo~ard with the Sunset Way application. The Housing Tax Credit pm~am, under S~tion 42 of the IRS Code and ~e TDRCA Qualified Allo~tion Plan, Segtion 49.5, r~uires that applications which a~ l~a~d in Po~ A~hur (and other municipalities with more than ~ice the state averse number of HTC uni~ per capi~) obtain a resolution ~m the ci~ council expressing suppo~ for the development of new, cle~, saf~ and decent affordable housing in the communJW. ~is is commonly kno~ ~ the "~o times per capita" resolution, ~d we would ~sp~lly request th~ you pla~ this issue on your next available council ag~da. We appreciate in advance the conside~on of the ei~ leademhip on this im~t issue. There hmg never been a mom critical time for the creation of ~d qualiw housing. I have a~ched a r~t example of a recent s~mil~ resolution which w~ ~ssed by the CiW of Donna T~as for your reference. Please call us if there am any queaions, and we I~k fo~d to hearing ~om you w~th eonfi~afion of the council dates as this becomes an agenda item. Sincerely, John O. Boyd Vice Cmsid~t For the Pa~ership EXHIBIT "B" INCENTI'FE A~REEMENT BETWEEN TEE CITY OF PORT ARTHUR AND SUNSET WAY LIMITED PARTNERSHIP This Incentive Agreement (this ,,Agreement") is entered into as of February 1, 2006 (the ,,Effective Date") by and between the City of Port Arthur (the "City"), a Texas municipal corporation of the County of Jefferson and State of Texas, and Sunset Way Limited Partnership. Article 1. General Provisions 1.01. This Agreement is authorized by Chapter 380 (Miscellaneous Provisions Relating to Municipal Planning and Development) of the Texas Local Government Code, Sections 380.001 through 380.003. 1.02. Sunset Way Limited Partnership owns or is negotiating a contract to purchase certain land (the ,,Property"} in the City of Port Arthur, Jefferson County, Texas described as an approximate 6.24 acre tract located at the intersection of Central Mall Drive and Oakmont Drive. Sunset Way Limited Partnership proposes to construct a 96-unit apartment complex on this site, which the City has found will contribute to an increase in economic development in the area. 1.03. The Property is not part of an improvement project financed with tax increment bonds. 1.04. The Property is not owned or leased by any member of the Port Arthur City Council or any member of the City Planning and Zoning Commission. Article 2. Incentive 2.01. As an incentive for the construction of the apartment complex in the area, the City agrees to loan Sunset Way Limited Partnership, in cash or credit, $336,096, as described in Exhibit ~A", which such forms as to a note and the pledging of collateral to be approved by the City Attorney. 2.02. Sunset Way Limited Partnership is responsible to pay for all construction costs, which includes, but is not limited to, the cost to tap into the City's water and sewer system and to pay for all meters and related equipment. z. sunset way_incentive.agreement 2.03. Notwithstanding anything to the contrary contained herein, (a) the completion of the apartment complex with the receipt of a certificate of occupancy pursuant to local, state, and federal regulations and with the dimensions and amenities as described in the application of Sunset Way Limited Partnership to the Texas Department of Housing and Community Affairs, (b) the payment of all taxes and utility bills by Sunset Way Limited Partnership to the City of Port Arthur, and (c) the maintenance of the facility by Sunset Way Limited Partnership to local, state and federal requirements is a requirement and obligation of Sunset Way Limited Partnership, which they have agreed to perform. Article 3. Effect of S&le &nd Assignment 3.01. Sunset Way Limited Partnership shall have the right, with City's consent, which will not be unreasonably withheld, to transfer or assign this Agreement to a financially solvent Affiliate or any other solvent business that will occupy the apartment complex for the purpose of operating an apartment complex. Article 4. Independent Contractor/Indemnity 4.01. In executing this Agreement and in performing their respective obligations hereunder, the City and Sunset Way Limited Partnership are acting independently and not in any form of partnership or joint venture. The City assumes no responsibilities or liabilities to any third parties in connection with this Agreement. Article 5. Documentation 5.01. Sunset Way Limited Partnership will provide documentation to the City as to the specification for the construction, the name of the contractors, the date that construction is commenced, and the date construction is completed, and when they pay all local taxes. Sunset Way Limited Partnership will not be paid any funds by the City if they are in arrears in any taxes, utility bills, or other charges to the City, and the City can terminate this contract if Sunset Way Limited Partnership fails to pay its taxes, utility bills, or other charges. The 6.24 acres and all improvements thereon shall remain taxable. z. sunset way_incentive.agreement 2 ~ticle 6. ~otlee 6.01. ~ the apartment comple~ o~ 96 u~its is not commenced by December 1, 2006, then there will be a default in the note, and interest will be charged at a 12% per annum. All notices required or permitted by this Agreement will be delivered either, (a) by certified mail, postage prepaid, effective five (5) days after mailing, or (b) by hand delivery or by a nationally recognized overnight courier, in either case effective upon delivery, in all cases addressed as follows (or to such other address as a party may specify to the other party by notice delivered in accordance with the terms hereof): TO= SUNSET WAY LIMITED PARTNERSHIP ATTN: Mr. John O. Boyd, Vice President 912 South Capital of Texas Highway, Suite 200 Austin, TX 78746 Phone: (512) 306-9206 Fax: (512) 306-9010 TOg CITY OF PORT ARTHUR ATTN: Stephen Fitzgibbons, City Manager 444 4th Street P. O. Box 1089 Port Arthur, TX 77641-1089 Article 7. Miscellaneous 7.01. This Agreement was approved by the City Council of the City of Port Arthur by Resolution No. at its meeting on , 2006. 7.02. If any section, subsection, paragraph, sentence, phrase, or word of this Agreement is held invalid for any reason, the balance of this Agreement will remain in effect and will be read as if the parties intended at all times not to include the invalid section, subsection, paragraph, sentence, phrase, or word. 7.03. This Agreement will be construed under the laws of the State of Texas. 7.04. This Agreement may be executed by the parties in multiple counterparts, all of which counterparts when taken together constituting one Agreement. z. sunset way_incentive.agreement 3 Article 8. Termination Clauses 8.01. This Agreement can be terminated by the City of Port Arthur if Sunset Way Limited Partnership does not own the property described in Exhibit ~A-I" by December 1, 2006, does not complete the construction by December 1, 2008, does not maintain the property pursuant to local, state, and federal regulations, does not pay the city its utility bills, and taxes, and does not comply with any terms of this agreement. 8.02. If the events delineated in Section 8.01 occurs, the City of Port Arthur shall give Sunset Way Limited Partnership ten {10) days written notice thereof. 8.03. The funds made available herein are subject as to the City's annual budget cycle. SIGNED AND AGREED to on this the __ day of , 2006. CITY OF PORT ARTHUR, a Texas Municipal Corporation (the "City") BY: Name: Stephen Fitzgibbons Title: City Manager SIGNED AND AGREED to on this the __ day of , 2006. SUNSET WAY LIMITED pARTNERSHIP BY: Name: Title: President z. sunset way_incentive.agreement 4 EXHIBIT "A" TO THE AGREEMENT PREDEVELOPMENT LOAN PRELIMINARY SUMMARY OF TERMS AND CONDITIONS January ,2006 BORROWER: Sunset Way, Ltd. PRINCIPAL AMOUNT: Amount to be determined by the following formula: Number of units times the required TDHCA funding requirement less the amount of city fee waivers (the "Loan"). Example: 96 Units x $3,501 = $336,096 minus total amount of waivers allowed LENDER: City of Port Arthur or affiliated entity. GUARANTOR: Joint and several guaranty by Borrower individually, and a to-be-determined party, reasonably acceptable to Lender, that is affiliated with the entity that will be in the investor limited partner of Borrower (The equity investor and purchaser of the tax credits). PURPOSE: The proceeds of the Loan will be utilized to pay for predevelopment costs such as land acquisition and certain architectural and engineering fees associated with the development of Sunset Way Apartments in Port Arthur, Texas (the "Project"). TERM: Twelve months from the date of execution of the promissory note (the "Note") evidencing the Loan. REPAYMENT: All principal and accrued interest will be due and payable in nine equal monthly installments. INTEREST RATE: The annual rate of one percent (1%) plus the highest prime rate as published on the date of execution of the Note in the Wall Street Journal (or any comparable publication selected by the Lender in its reasonable discretion if the Wall Street Journal ceases to publish such index). COLLATERAL: The Loan shall be secured and collateralized by a pledge of collateral cash and assignment of account of even date with the Note and by the guaranties described above. The amount in the cash collateral account shall at all times equal or exceed 100% of the original principal amount of the Loan. This Summary of Terms and Conditions constitutes the commitment of Lender to make a predevelopment loan to Borrower on the terms and conditions described above. Such commitment is conditioned upon: (1) Lender's approval of the party providing the joint and several guaranty with Borrower (2) Lender's receipt and approval of final form loan documents; (3) establishment of the cash collateral account in a manner acceptable to Lender; (4) Borrower's receipt of low-income housing tax credits for the development of the Project; (5) no material adverse change in Borrower or the Project or the circumstances surrounding Borrower's development of the Project that would, in Lender's reasonable discretion, make the Loan unacceptable to Lender; and (6) final approval of the transaction by Lender's counsel. COMMITMENT-- PAGE 1 AUSTIN: 053143.00000: 334109vl Agreed as of the date first written above. LENDER: BORROWER: City of Port Arthur By: ,, Its general partner By: By: Name: Name: Title: Title: COMMITMENT -- PAGE 2 AUSTIN: 053143.00000: 334109vl