HomeMy WebLinkAboutR35-Economic Development Agency
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ECONOMIC DEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
FROM: Maggie Pacheco SUBJECT: COVENANT DEVELOPMENT
Deputy Director/Director ~' (Q) [OJ "0/7 AGREEMENT - COVENANT
,Housing & Community De"elop t 0 J2- U DEVELOPMENT,INC.
~ AND AMENDMENT NO. I TO THE
DATE: November 22, 2002 LOAN AGREEMENT FOR THE
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SvnoDsis of Previous Commission/Couneil/Committee Action(s):
On October 24, 2002, the Redevelopment Committee voted unanimously to recommend that the Community
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Recommended Motion(s):
(Communitv DeveloDment Commission)
MOTION A: A RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF
SAN BERNARDINO AUTHORJZING AND APPROVING THE AGENCY EXECUTIVE
DIRECTOR TO EXECUTE THE DEVELOPMENT AGREEMENT BY AND BETWEEN THE
REDEVELOPMENT AGENCY AND COVENANT DEVELOPMENT, INC REGARDING THE
DEVELOPMENT OF 22 AFFORDABLE HOUSING UNITS.
MOTION B: A RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF
SAi'-l BERNARDINO AUTHORJZING AND APPROVING THE AGENCY EXECUTIVE
DIRECTOR TO EXECUTE THE AMENDMENT NO.1 TO THE LOAN AGREEMENT FOR THE
VERDEMONT IMPROVEMENTS DATED JANUARY 15, 1993 BY AND BETWEEN THE
REDEVELOPMENT AGENCY AND THE CITY OF SAN BERNARDINO WHICH PROVIDES
FOR THE COLLECTION AND DISTRJBUTION OF CERTAIN DEVELOPMENT FEES (FROM
THE DR. FELDKAMP PREDECESSOR TO COVENANT DEVELOPMENT, INC, BICE AND
GLAZIER PROPERTIES) TO FUND THE CONSTRUCTION OF THE VERDEMONT FIRE
STATION.
(Mavor and Common Council)
MOTION C: A RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO AUTHORJZING AND APPROVING THE MAYOR TO EXECUTE THE
AMENDMENT NO.1 TO THE LOAN AGREEMENT FOR THE VERDEMONT IMPROVEMENTS
DATED JANUARY 15, 1993 BY AND BETWEEN THE REDEVELOPMENT AGENCY AND THE
CITY OF SAN BERNARDINO WHICH PROVIDES FOR THE COLLECTION AND
DISTRJBUTION OF CERTAIN DEVELOPMENT FEES (FROM THE DR. FELDKAMP
PREDECESSOR TO COVENANT DEVELOPMENT, INC., BICE AND GLAZIER PROPERTIES)
TO FUND THE CONSTRUCTION OF THE VERDEMONT FIRE STATION.
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Contact Person(s):
Maggie Pacheco
Phone:
(909) 663-1044
Project Area(s)
N/A
Ward(s):
61h
Supporting Data Attached: 0 Staff Report 0 Resolution(s) 0 Agreement(s)/Contract(s) 0 Map(s) 0 Letters
FUNDING REQUIREMENTS N;;9,unt: $ N/A Source:
"ONATURe / ;''''' ,,"<OOri'~' yyf i2~
Gary V.y:<lsdel, Executive Dir ~ggi: ~checo, Deputy Director/Director
/ Housing & Community Development
Commission/Council Notes:
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COMMISSION MEETING AGENDA
Meeting Date: 1210212002
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Agenda Item Number: f\...
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ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
Development A!!reement - Covenant Development. Inc.
and Amendment No.1 to the
Loan A!!reement for the Verdemont Improvements
BACKGROUND:
Over the course of the past six (6) years, the City has made a series of amendments (Mutual Release
and Settlement Agreement, and five subsequent amendments) to the Agreement between the City of
San Bemardino and Irving M. Feldkamp ill, or his assignees (the "Developer").
Commencing in June 1990, the City created Community Facilities District No. 995 ("District") which
encompassed over 150 acres, including but not limited to the Bice, Glazier and Feldkamp properties.
The District included the Feldkamp property, which is now commonly kno\vn as Cimarron Heights,
at Verdemont Ranch in North San Bernardino, and consists of76 residential lots (the "Property"). In
1994, there was a default by the Developers under the District, and the City commenced an action for
judicial foreclosure to collect special tax liens from the involved Developers, including Feldkamp.
However, in an effort to avoid the foreclosure proceedings and reach some amicable mutual
resolution, the City and Dr. Feldkamp entered into a Mutual Release and Settlement Agreement (the
"Settlement Agreement") on or about August 29, 1994. This Agreement outlined the deal points
under which the City would not proceed with the foreclosure proceedings and the Developer would
be obligated to perform certain provisions under said Agreement. In April 2001 (4th Amendment)
and on August 1,2001 (5th Amendment), the City and Developer modified the Settlement Agreement
and provided for new and compromised positions on each of the respective parties. In particular,
although the Redevelopment Agency is not a party to the Settlement Agreement or the subsequent
amendments, both 4th and 5th Amendments obligate the Agency to undertake certain actions and
responsibilities. These actions and responsibilities included assisting the City in developing a
financial strategy to avoid the foreclosure proceedings and payoff the outstanding debt on the
properties encumbered under the District. The Agency issued $4.7 million in housing tax-exempt
bonds and used a portion, amongst other things, to pay on behalf of Dr. Feldkamp the sum of
$394,384.94 (the "Agency Advancement"), which Dr. Feldkamp used to pay the City his share of the
delinquent District special tax debt in lieu of the foreclosure. These Amendments also contained
several other requirements and provisions, such as: (I) obligating the Developer or its assignee, to
reserve a minimum of 22 lots at the Property for low and moderate income home buyers in
consideration for the Agency Advancement to Developer; (2) insuring that the City, via a letter
Agreement with the Agency, make available Mortgage Assistance Program funds to the
Developer/Assignee to assist their buyers with down payment assistance, to the extent the Agency
had funds available; and, (3) an obligation by the Developer to pay Certain Development Impact Fees
which will be discussed in detail below.
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COMMISSION MEETING AGENDA
Meeting Date: 12/0212002
P:\Clericill Services DepI\Ma:rgam ParteM8~\CDC 2002\02.12-02 Covenant Oev.doc
Agenda Item Number:
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Economic Development Agency Staff Report
Covenant Development, Inc.
Page 2
CURRENT ISSUE:
Affordable Housinl! Requirement
Dr. Feldkamp has now sold the Property to Covenant Development, Inc., ("cdi") new owner and
assignee (the "Assignee") who is now obligated to assume the collective responsibilities and
obligations under the Settlement Agreement and the respective amendments. The Assignee has
commenced construction of the 76 homes, at Cimarron Heights in Verdemont Ranch. However, the
Assignee was not entirely aware of the magnitude of the requirements imposed by the Agency and
City on the Developer, specifically, to set aside 22 lots or homes for low/moderate income
homebuyers; furthermore, the Assignee has pre-sold the majority of the homes without any disclosure
to any potential buyer (22 homes) that certain affordability, occupancy and resale (shared
appreciation) restrictions would be recorded against the low/moderate income parcels via an Agency
Affordability Covenant. This Affordability Covenant would remain in effect for a period of 10 years
pursuant to the Redevelopment Law in effect at the time the 5th Amendment was executed (the
"Agency Covenant").
As a result, the Assignee and Staff have agreed, that during the next few months, altemative and
suitable land on which the Assignee will develop or rehabilitate not less than 22 affordable housing
units (the "Replacement Housing Site") will be identified and purchased by the Assignee.
Essentially, the attached Development Agreement includes a schedule of certain milestones that must
be achieved by the Assignee such as: no later than April 2003, the Assignee will identify and enter
into a purchase contract for the Replacement Housing Site; by a date no later than July 2003, the
Assignee must close Escrow on the Replacement Housing Site; and commence construction by a date
no later than October 2003, and to complete construction of all housing units by October 2005. If the
Assignee fails to meet the above noted milestones, principally the identification and the purchase of
the Replacement Housing Site, the Assignee will be required to repay the Agency the sum of
$394,384.94, with interest accruing, at today's prime rate, by a date no later than October 2003. The
Assignee will also have the option to repay the Agency Advancement at any time prior to .october
2003, plus interest.
CollectionlDistribution of City Development Fees -
Development of the Verdemont Fire Station
In 1994, the City entered into a Mitigation Agreement with the former vacant land property owners of
CFD 995 and the San Bernardino City Unified School District (the "School District") whereby the
vacant properties included within the CFD 995 would at all times thereafter be exempt from any then
current or future school fees or other exactions of the School District resulting from the development
of the vacant properties within the CFD 995.
Also in 1994, in connection with the restructuring of the Refunding Bonds, the School District (i)
acquired certain property from the City to construct a new middle school facility for an acquisition
price equal to $1,000,000 which was paid to the City from the proceeds of the Refunding Bonds, (ii)
prepaid to the City from the proceeds of the Bonds an amount equal to $500,000 of City fees that
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COMMISSION MEETING AGENDA
Meeting Date: 12/0212002
Agenda Item Number:
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Economic Development Agency Staff Report
Covenant Development, Inc.
Page 3
would be assessed upon such development of a new middle school facility by the various departments
of the City, and (iii) agreed that an additional $800,000 that was applied to redeem the Refunding
Bonds may be repaid by a special tax and municipal bond financing if and to the extent that said
$800,000 would be required in the future for the construction of a school facility in the Verdemont
Area. The dollar amounts owned to the City under the various agreements total $2,300,000,
approximately $5,374 per house (the "CFD-995 City Fee"); however, as a result of some special tax
prepayment by the former landowner, the $5,374 was reduced to $5,168. Dr. Feldkamp, the prior
owner of the Covenant Property agreed to pay to the City both the CFD-995 City Fee and an
additional $2,000 per unit as an unrestricted contribution to the City General Fund (the "Covenant
Contribution"). As such, staff recommends that the Mayor and Common Council declare the manner
in which certain fees, including the CFD-995 City Fee and the Covenant Contribution, will be used
and applied for the benefit of the City and the residents of the northern area of the City (generally
referred to as the "Verdemont Area").
The City has acquired title to an approximately 1.6 acre parcel of property located at the northeast
comer of Kendall and Palm Avenue (# 0261-19-06) within the Verdemont Area upon which a Fire
Station is intended to be constructed and operated by the City for the purpose of providing primary
fire service within the Verdemont Area.
Separately, the Agency has previously loaned to the City an amount equal to $1,908,063.68 original
principal balance, with a current outstanding balance of $1,730,870.03, at an interest rate equal to 5%
per annum pursuant to a loan agreement dated January 5, 1993 (the" Verdemont Loan Agreement").
The Agency loaned such amount for the undertaking and completion by the City of various items of
infrastructure within the Verdemont Area, and the source of funds for the repayment to the Agency
was required to be paid by all developers and property owners seeking to develop property within the
Verdemont Area of the City.
The City had previously established a Verdemont Infrastructure Fee ("VlF") for the purpose of
imposing developer fees as permitted by California law upon the construction of houses and other pay
for the public improvements, streets and other infrastructure as required at that time within the
Verdemont Area. The VlF as initially adopted by the appropriate actions of the City was equal to
$6,900 per residential dwelling unit or its equivalent primarily for the purpose of funding a Fire
Station and other then required items of public infrastructure within the Verdemont Area.
The attached Resolutions address the manner in which CFD-995 City Fees are to be collected and
distributed in order to generate revenues to construct the Verdemont Fire Station and to insure a
repayment mechanism to the Agency for the Verdemont Loan, and specifically as follows: the City
shall remit to the Agency (i) the VlFs that are paid within the Verdemont Area, (ii) the entire amount
of the Covenant Contribution, and (iii) that portion of the CFD-995 City Fees that are attributable to
items which are other than reimbursements to the City Water Department (i.e., - see formula in
Verdemont Amendment No.1; the $5,374 CFD-995 City Fees reduced to $5,168 solely for the
Feldkamp property, because of prior prepayments shall be remitted to the Water Department and
$1,938 shall be remitted to the Agency plus an additional $2,000 for the Feldkamp property). The
various fees to be collected within the Verdemont Area, should be applied as follows: (i) the
COMMISSION MEETING AGENDA
Meeting Date: 12/0212002
P:\Clcrical Scrviee$ Dept\Marg~t ParltcMllenda\CDC 2002\O2.12.{)2 Covellallt Dev.doc
Agenda Item Number:
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Economic Development Agency Staff Report
Covenant Development, Inc.
Page 4
Covenant Contribution shall be held by the Agency in a Special Trust account established and
designated as the Verdemont Fire Station Trust Account (discussed below); (ii) the VIF payable to
the City with respect to the Property of the Assignee shall be paid to the Agency as a payment with
respect to the interest on the Agency Verdemont Loan Agreement provided that the Agency
immediately upon receipt of such funds contributes said amounts towards the architectural,
engineering, construction, furnishing or equipping of the Verdemont Fire Station when and at the
times required by the City, up to a maximum of $1.8 million. Principal payments on the Agency
Verdemont Loan Agreement will be paid to the Agency but will not be considered as reduction
against the principal of the Verdemont Loan Agreement but will be used in furtherance of the Fire
Station; (iii) that portion of the CFD-995 City Fee that is attributable to items that do not represent a
reimbursement to the City Water Department should be deposited into the Verdemont Fire Station
Trust Account. However, the City may also use and apply the entire amount of the CFD-995 City
Fee, including that portion that is reimbursable to the City Water Department, if another source of
funds is applied to accomplish such reimbursements and is accepted by the Water Department or in
the event there are no further amounts then due and owing to the City Water Department.
It is further proposed, that the City Engineer should evaluate the purposes for which the VIF was
established to determine the public improvements, infrastructure and other public facilities presently
required to be constructed by the City within the Verdemont Area, giving due consideration to the
repayment obligation of the City to the Agency pursuant to the Verdemont Loan Agreement and to
any other obligations owing to the City Water Department. Moreover, it is advisable that the City
Engineer should recommend to the Mayor and Common Council the amount of any proposed
increases to the VIF and the purposes for the expenditures.
The City Administrator, together with Agency Staff will seek to confirm with the SB School District
the provisions contained in the Mitigation Agreement to assure that the properties that were the
subject of such agreement, including the properties purchased by the Agency (Bice, Glazier) continue
to remain exempt from the payment of any school facility fees, impaction fees or other exactions that
the SB School District may otherwise seek to impose upon other properties within the jurisdictional
boundaries of the School District.
ENVIRONMENTAL IMPACT:
Not applicable.
FISCAL IMPACT:
Should the Assignee fail to identify and develop the Replacement Housing Site within the specified
time frames, the Agency will recover its full Agency Advancement of $394,384.94, plus accrued
interest. Upon such repayment, said funds will be returned to the Agency's low/moderate income
housing fund, and to repay a portion of the $4.7 million Bond Debt.
COMMISSION MEETING AGENDA
Meeting Date: 12/0212002
P:\Clcrita\ Services OepI\Margill'l:l ParkeMgcnda\CDC 2002\02.12.02 Covenant Dcv.doc
Agenda Item Number:
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Economic Development Agency Staff Report
Covenant Development, Inc.
Page 5
The Amendment No.1 to the Verdemont Loan Agreement will enable the Agency to generate
revenues of up to $1.8 for construction of the Verdemont Fire Station and also continue to collect all
Verdemont Development Fees until repayment ofthe Verdemont Loan of$1.9 million.
RECOMMENDATION:
That the Community Development Commission and Mayor and Common Council adopt the attached
Resolutions.
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Maggie Pacheco Deputy Director/Director
Housing & Community Development
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COMMISSION MEETING AGENDA
Meeting Date: 12/02/2002
Agenda Item Number:
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RESOLUTION NO.
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A RESOLUTION OF THE COMMUNITY DEVELOPMENT
COMMISSION OF THE CITY OF SAN BERNARDINO AUTHORIZING
AND APPROVING THE AGENCY EXECUTIVE DIRECTOR TO
EXECUTE THE DEVELOPMENT AGREEMENT BY AND BETWEEN
THE REDEVELOPMENT AGENCY AND COVENANT DEVELOPMENT,
INC. REGARDING THE DEVELOPMENT OF 22 AFFORDABLE
HOUSING UNITS
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WHEREAS, the Redevelopment Agency of the City of San Bernardino (the "Agency") i
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Section 33000, et seq.) and is authorized thereunder to purchase and sell property in order t
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organized and existing under the Community Redevelopment Law (Health and Safety Cod
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carry out its redevelopment purposes; and
WHEREAS, in 1994, the City of San Bernardino (the "City") entered into a Settlemen
Agreement ("Original Settlement Agreement") with Dr. Irving Feldkamp ("Predecessor"), a
predecessor in interest to Covenant Development, Inc. ("Covenant") in connection with certai
property within Community Facilities District 995 ("CFD 995"); and
WHEREAS, said Original Settlement Agreement was amended by that certain Fift
Amendment to Mutual Release and Settlement Agreement (the "Fifth Amendment"); and
WHEREAS, pursuant to the Fifth Amendment, and the Agreement regarding Deposit 0
Funds and the Letter Agreement each dated July 23, 2001 and each executed by the Agency
Covenant was required to set aside 22 lots for low and moderate income housing and th
Agency was required to use its best efforts to provide mortgage assistance to all buyers of th
Property who qualify for the Agency's Mortgage Assistance Program ("MAP") in certain years'
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and
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WHEREAS, Covenant pre-sold the majority of the lots on the Property without th
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requirement that certain parcels would be restricted to low and moderate income housing; and
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WHEREAS, the Agency and Covenant desire to provide replacement property (th
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"Replacement Housing Site") 22 lots of which shall be restricted to low and moderate incom
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housing or in the alternative Covenant shall be required to repay the Agency $394,384.94 plu
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interest by no later than October I, 2003; and
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WHEREAS, Covenant Development and the Agency desire to amend and supercede th
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Development Agreement dated December 2, 2002 to evidence the terms of the amende
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Letter Agreement and the Agreement regarding Deposit of Funds by the execution of that certai
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agreement between the parties.; and
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NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION, ON BEHAL
OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, DOES HEREB
RESOLVE, DETERMINE AND ORDER, AS FOLLOWS:
IS
Section I.
Approval of Development Agreement and Note. The Agency hereb
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approves the form of Development Agreement attached hereto as Exhibit A and the form of Not
attached thereto with such changes as shall be approved by the Executive Director upo
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recommendation of Special Counsel.
Section 2.
Official Action. The Executive Director, and any and all other officers 0
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the Agency are hereby authorized and directed, for and in the name and on behalf of the Agency
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to do any and all things and take any and all actions, including execution and delivery of any an
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all assignments, certificates, requisitions, agreements, notices, consents, instruments 0
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conveyance, warrants and other documents, which they, or any of them, may deem necessary 0
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advisable in order to consummate the transactions contemplated herein. Whenever in thi
Resolution any officer of the Agency is authorized to execute or countersign any document 0
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take any action, such execution, countersigning or action may be taken on behalf of such office
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by any person designated by such officer to act on his or her behalf in the case such officer shal
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be absent or unavailable. The Agency hereby appoints its Executive Director as agent of th
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Agency for purposes of executing any and all documents and instruments which any officer 0
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on the day of
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Commission Members: Ayes
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ESTRADA
11 LIEN
12 MCGINNIS
e13 DERRY
SUAREZ
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15 ANDERSON
16 MC CAMMACK
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A RESOLUTION OF THE COMMUNITY DEVELOPMENT
COMMISSION OF THE CITY OF SAN BERNARDINO AUTHORIZING
AND APPROVING THE AGENCY EXECUTIVE DIRECTOR TO
EXECUTE THE DEVELOPMENT AGREEMENT BY AND BETWEEN
THE REDEVELOPMENT AGENCY AND COVENANT DEVELOPMENT,
INC. REGARDING THE DEVELOPMENT OF 22 AFFORDABLE
HOUSING UNITS
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Section 3. This Resolution shall take effect upon the date of its adoption.
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I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community
Development Commission of the City of San Bernardino at a
meeting thereof, held
, 2002, by the following vote to wit:
Nays
Abstain
Absent
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Rachel G. Clark, City Clerk
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The foregoing resolution is hereby approved this
day of
,2002.
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Judith Valles, Chairperson
Community Development Commission
of the City of San Bernardino
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By:
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DEVELOPMENT AGREEMENT
BY AND BETWEEN
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
AND
COVENANT DEVELOPMENT, INC.
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Exhibit "A"
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DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (the "Agreement") is entered into as of
December_, 2002, by and between the REDEVELOPMENT AGENCY OF THE CITY OF
SAN BERNARDINO, a public body corporate and politic (the "Agency") and COVENANT
DEVELOPMENT, INC., a California corporation (the "Developer"). The Agency and
Developer hereby agree, as follows:
RECITALS
WHEREAS, on June 18, 1990, the City of San Bernardino (the "City") created
Community Facilities District No. 995 ("District") pursuant to the Mello-Roos Community
Facilities Act of 1982 (Government Code Section 53311 et. sea.). The City issued $7,440,000
Special Tax Bonds ("Bonds"), which were secured by the special taxes authorized to be levied
against all parcels within the District. The Bonds were then refunded with the $3,315,000
Community Facilities District No. 995 of the City of San Bernardino (Verdemont Area) Special
Tax Refunding Bonds (the "Refunding Bonds"); and
WHEREAS, on or about January 14, 1994, the City commenced an action for
judicial foreclosure of special tax liens in the Superior Court of the State of California for the
County of San Bernardino, against certain named defendants therein, including the prior owner
of the property described in Exhibit A hereto (the "Property"); and
WHEREAS, the City and the prior owner of the Property entered into a Mutual
Release and Settlement Agreement dated as of August 29, 1994 (the "Original Settlement
Agreement"); and
WHEREAS, pursuant to Agreement Re Deposit of Funds between the Agency
and the Developer executed in August, 1999, the Developer paid the full amount of the
outstanding balance of special tax debt from amounts he received from the Agency in
consideration for restricting the sale of an aggregate of 22 lots of the Property for residents of
low- and moderate-income; and
WHEREAS, the Original Settlement Agreement was amendment by the Fifth
Amendment to Mutual Release and Settlement Agreement dated as of July 23, 2001 (the "Fifth
Amendment") and pursuant to the Fifth Amendment and that certain Letter Agreement dated as
of July 23, 2001, (the "Letter Agreement"), as referenced in the Fifth Amendment, the Agency
was required to use its best efforts to provide mortgage assistance to all buyers of the Property
who qualify for the Agency's Mortgage Assistance Program ("MAP"); and
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WHEREAS, Covenant pre-sold the majority of the lots on the Property and did
not disc.ose the requirement th, t certain parcels would be restricted to low and moderate income
housing; and
WHEREAS, in order to meet its obligations to the Agency, Covenant desires to
provide replacement property (the "Replacement Housing Site"), 22 lots of which shall be
restricted to low and moderate income housing, or in the alternative, Covenant shall be required
to repay the Agency $394,384,94 plus interest by no later than October 1,2003; and
WHEREAS, Covenant and the Agency desire to amend and supercede the Letter
Agreement and the Agreement Re Deposit of Funds by the execution of this Agreement, as
follows,
NOW THEREFORE, THE PARTIES HERETO AGREE, AS FOLLOWS:
Section LOL Parties to the Agreement.
(a) The Agency is a public body, corporate and politic, exerclsmg
governmental functions and powers and organized and existing under Chapter 2 of the
Community Redevelopment Law of the State of California (Health and Safety Code Section
33020, et sea) The principal office of the Agency is located at 201 North "E" Street, Suite 301,
San Bernardino, California 9240 I,
(b) The Developer is a California corporation, The principal office and
mailing address of the Developer for purposes of this Agreement is:
Covenant Development, Inc.
22365 Barton Road, Suite 110
Grand Terrace, CA 92313
Attn: Skip Hubby
Telephone: (909) 503-1134
Fax: (909) 503-1142
(c) The City of San Bernardino is not a party to this Agreement.
Section 1.02. Purpose of Agreement. The Agency loaned certain low and
moderate income housing funds to the Developer in consideration for the Developer restricting
certain lots located within former CFD 995 now commonly known as Cimmaron Heights at
Verdemont Ranch (the "Property") to low- and moderate- income home buyers. The Developer
sold all of the lots without restricting them, and thus in order to meet its obligations to the
Agency, it shall purchase property (the "Replacement Housing Site") approved by the Agency
and shall construct not less than 22 houses which shall be restricted to low- and moderate-
income buyers.
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Section 1.02. The Replacement Housing Site. Developer shall locate the
Replacement Housing Site no later than February 28, 2003. Subject to Agency approval of the
Replacement Housing Site, the Developer shall enter into escrow for the purchase of the
Replacement Housing Site no later than April I, 2003. The escrow period shall be no longer
than 90 days. Construction on the Replacement Housing Site shall commence no later than
October I, 2003. In the event that Developer has not commenced construction by October I,
2003, it shall repay the amount loaned to the Developer plus interest by no later than the close of
business October I, 2003. Interest shall be calculated from the date of this Agreement at the
prime rate on the date hereof.
The schedule of performance set forth in Exhibit "B" attached hereto describes the time
and scope of the development.
Section 1.04. Restrictions Against Change in Ownership. Management and
Control of Developer and Assignment of Agreement. The qualifications and identity of the
Developer are of particular concern to the Agency. It is because of those qualifications and
identity that the Agency has entered into this Agreement with the Developer. No voluntary or
involuntary successor in interest of the Developer shall acquire any rights or powers under this
Agreement. The Developer shall not assign all or any part of this Agreement or any rights
hereunder without the prior written approval of the Executive Director of the Agency, which
approval shall not be unreasonably withheld.
The Developer shall promptly notify the Agency in writing of any and all changes
whatsoever in the identity of the business entities and individuals either comprising or in control
of the Developer, as well as any and all changes in the interest or the degree of control of the
Developer by any such party, of which information the Developer or any of its officers have
been notified or may otherwise have knowledge or information. This Agreement may be
terminated by the Agency and the full amount of the Loan Amount (as defined in Section
2.01(b)) shall become immediately due and payable if there is any significant or material change,
whether voluntary or involuntary, in membership, ownership, management or control of the
Developer (other than such changes occasioned by the death or incapacity of any individual) that
has not been approved by the Agency prior to the time of such change.
Section 1.05. Benefits. The Agency has determined that the development of low
and moderate income housing within the City is of benefit to the City and its residents and will
materially assist in the elimination of blight within the City.
ARTICLE II
Section 2.01. Purchase of Replacement Housing Site
(a) Subject to all of the terms, conditions and provisions of this Agreement
the Developer hereby agrees to purchase an interest in real property located within the City of
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San Bernardino for the purpose of constructing housing on at least twenty-two (22) lots which
shall be set aside for low- and moderate- income purchasers. Said lots shall be restricted to low-
and moderate-income home buyers for a period of ten (lO) years from the date a certificate of
occupancy is issued. The Agency shall be authorized to record Affordability Covenants against
twenty-two (22) lots to be designated by Developer within the Housing Replacement Site. The
purchase of the Replacement Housing Site shall occur no later than the dates set forth on the
Scope of Development attached hereto as Exhibit B.
(b) In the event that the Developer fails to commence construction on the
Replacement Housing Site by October I, 2003, on that date he shall be required to pay the
Agency Three Hundred Ninety Four Thousand Three Hundred Eighty Four Dollars and Ninety
Four Cents ( $394,384.94) plus interest thereon from October I, 2002, at the prime rate as of
October 1,2002 (the "Loan Amount").
(c) This Agreement shall constitute a promissory note evidencing the
obligation of the Developer to pay to the Agency the Loan Amount. A deed of trust covering the
Replacement Housing Site (the "Deed of Trust") shall secure the obligation of the Developer to
pay to the Agency the Loan Amount. The deed of trust shall be in the form attached hereto as
Exhibit "C". The Agency shall, at the request ofthe Developer, agree to subordinate the Deed of
Trust to a construction loan, the proceeds of which shall be used and applied by the Developer
solely for the improvement and development of the Replacement Housing Site.
(d)
There shall be no prepayment restrictions for the payment of the Loan
Amount.
Section 2.02. Agency Mortgage Assistance. The Agency shall use its best
efforts to provide assistance through its Mortgage Assistance Program ("MAP") on a first come
first serve basis to all of the Developer's buyers who qualify for MAP assistance. Under the
MAP, the buyers shall receive no more than the following amounts in the following years:
2003/2004 - $50,000; 2004/05 - $100,000; 2005/06 - $50,000.
In the event the foregoing amounts are not used by Developer's buyers in the
years granted, said amounts shall not be carried forward, and thus shall not be available to the
Developer's buyers in any subsequent year. The foregoing grants shall be subject to all of the
terms, conditions and qualifying criteria as may be specified in the MAP as such terms,
conditions and criteria exist at such time and consistent with the requirements imposed by the
funding source and other discretionary criteria as may be established by the Agency. Developer
shall not receive any waivers of terms in connection with this Agreement.
Section 2.03. Reoresentations and Warranties.
(a) Warranties and Reoresentations by the Agency. The Agency hereby
makes the following representations, covenants and warranties:
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(I) Due Organization. The Agency is a community redevelopment agency,
duly formed and operating under the laws of California. The Agency has
the legal power, right and authority to enter into this Agreement and to
execute the instruments and documents referenced herein, and to
consummate the transactions contemplated hereby.
(2) Requisite Action. The Agency has taken all requisite action and obtained
all requisite consents in connection with entering into this Agreement and
the instruments and documents referenced herein and the consummation
of the transactions contemplated hereby, and no consent of any other party
is required.
(3)
Enforceability of Agreement. The persons executing any instruments for
or on behalf of the Agency have been authorized to act on behalf of the
Agency and that the Agreement is valid and enforceable against the
Agency in accordance with its terms and each instrument to be executed
by the Agency pursuant hereto or in connection therewith will, when
executed, be valid and enforceable against the Agency in accordance with
its terms. No approval, consent, order or authorization of, or designation
or declaration of any other person, is required in connection with the valid
execution and delivery of and compliance with this Agreement by the
Agency.
(b) Warranties and Representations bv the Developer. The Developer hereby
makes the following representations, covenants and warranties:
(I) The Developer is a duly organized and validly eXlstmg California'
corporation. The Developer has the legal right, power and authority to
enter into this Agreement and the instruments and documents referenced
herein and to consummate the transactions contemplated hereby. The
persons executing this Agreement and the instruments referenced herein
on behalf of the Developer hereby represent and warrant that such persons
have the power, right and authority to bind the Developer.
(2) The Developer has taken all requisite action and obtained all requisite
consents in connection with entering into this Agreement and the
instruments and documents referenced herein and the consummation of
the transactions contemplated hereby, and no consent of any other party is
required.
(3)
This Agreement is, and all agreements, instruments and documents to be
executed by the Developer pursuant to this Agreement shall be, duly
executed by and are or shall be valid and legally binding upon the
Developer and enforceable in accordance with their respective terms.
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(4) Neither the execution of this Agreement nor the consummation of the
transactions contemplated hereby shall result in a breach of or constitute a
default under any other agreement, document, instrument or other
obligation to which the Developer is a party or by which the Developer
may be bound, or under law, statute, ordinance, rule, governmental
regulation or any writ, injunction, order or decree of any court or
governmental body applicable to the Developer or to the Property.
Section 2.04. Books and Records. The Agency shall be afforded full opportunity
to examine all books and records which relate to the Property in the possession of the Developer
and or its agents or employees, including the reasonable right to make copies of such books and
records.
ARTICLE ill
COVENANTS TO RUN WITH LAND
Section 3.01. Obligation to Refrain from Discrimination. The Developer
covenants and agrees for itself, its successors, its assigns and every successor in interest to the
Property or any part thereof, that there shall be no discrimination against or segregation of any
person, or group of persons, on account of sex, marital status, race, color, religion, creed,
national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or
enjoyment of the Property; nor shall the Developer, itself or any person claiming under or
through it, establish or permit any such practice or practices of discrimination or segregation
with reference to the selection, location, number, use or occupancy of tenants, lessees,
subtenants, sublessee or vendees of the Property.
Section 3.02. Form of Nondiscrimination and Nonsegregation Clauses. The
Developer covenants and agrees for itself, its successors, its assigns, and every successor in
interest to the Property, or any part thereof, that the Developer, such successors and such assigns
shall refrain from restricting the sale, lease, sublease, rental, transfer, use, occupancy, tenure or
enjoyment of the Property (or any part thereof) on the basis of sex, marital status, race, color,
religion, creed, ancestry or national origin of any person. All deeds, leases or contracts
pertaining thereto shall contain or be subject to substantially the following nondiscrimination or
nonsegregation clauses:
(I)
In deeds: "The grantee herein covenants by and for itself, its successors
and assigns, and all persons claiming under or through them, that there
shall be no discrimination against or segregation of, any person or group
of persons on account of race, color, creed, religion, sex, marital status,
national origin, or ancestry in the sale, lease, sublease, transfer, use,
occupancy, tenure, or enjoyment of the premises herein conveyed, nor
shall the grantee or any person claiming under or through it, establish or
permit any such practice or practices of discrimination or segregation with
reference to the selection, location, number, use or occupancy of tenants,
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lessees, subtenants, sublessee, or vendees in the premises herein conveyed.
The foregoing covenants shall run with the land."
(2) In leases: "The Lessee herein covenants by and for itself, its successors
and assigns, and all persons claiming under or through them, and this lease
is made and accepted upon and subject to the following conditions: That
there shall be no discrimination against or segregation of any person or
group of persons, on account of race, color, creed, religion, sex, marital
status, national origin, or ancestry, in the leasing, subleasing, transferring,
use, occupancy, tenure, or enjoyment of the premises herein leased nor
shall the lessee itself, or any person claiming under or through it, establish
or permit any such practice or practices of discrimination or segregation
with reference to the selection, location, number, use, or occupancy, of
tenants lessees, sublessee, subtenants, or vendees in the premises herein
leased."
(3)
In contracts: "There shall be no discrimination against or segregation of
any person or group of persons on account of race, color, creed, religion,
sex, marital status, national origin, or ancestry, in the sale, lease, sublease,
transfer, use, occupancy, tenure, or enjoyment of the premises herein
conveyed or leased, nor shall the transferee or any person claiming under
or through it, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location,
number, use, or occupancy, of tenants, lessees, sub lessees, subtenants, or
vendees of the premises herein transferred." The foregoing provision shall
be binding upon and shall obligate the contracting party or parties and any
subcontracting party or parties, or other transferees under the instrument.
The covenant of this Section shall run with the land in perpetuity.
ARTICLE IV
DEFAULTS, REMEDIES AND TERMINATION
Section 4.01. Defaults - General.
The following shall constitute events of default:
(a) Failure to timely meet the requirements under the Scope of Development.
(b) Failure to pay the Agency the sum due as herein provided in the event
construction has not commenced by October 1,2003.
(c) Failure to timely meet any other obligation hereunder.
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The injured partv shall give written notice of default to the party in default,
specifying the default complained of by the nondefaulting party. Delay in giving such notice
shall not constitute a waiver of any default nor shall it change the time of default. Any failure or
delays by either party in asserting any of its rights and remedies as to any default shall not
operate as a waiver of any default or of any such rights or remedies. Delays by either party in
asserting any of its rights and remedies shall not deprive either party of its right to institute and
maintain any actions or proceedings which it may deem necessary to protect, assert or enforce
any such rights or remedies.
Section 4.02. Legal Actions.
(a) In addition to any other rights or remedies, either party may institute legal
action to cure, correct or remedy any default, to recover damages for any default, or to obtain any
other remedy consistent with the purposes of this Agreement. Such legal actions must be
instituted in the Superior Court of the County of San Bernardino, State of California, in any other
appropriate court in that County, or in the Federal District Court in the Central District of
California.
(b) The laws of the State of California shall govern the interpretation and
enforcement of this Agreement.
(c) In the event that any legal action is commenced by the Developer against
the Agency, service of process on the Agency shall be made by personal service upon the
Executive Director or Chairman of the Agency, or in such other manner as may be provided by
law.
Section 4.03. Rights and Remedies are Cumulative. Except with respect to any
rights and remedies expressly declared to be exclusive in this Agreement, the rights and remedies
of the parties as set forth herein are cumulative and the exercise by either party of one or more of
such rights or remedies shall not preclude the exercise by it, at the same or different times, of any
other rights or remedies for the same default or any other default by the other party.
ARTICLE V
GENERAL PROVISIONS
Section 5.01. Notices. Demands and Communications Between the Parties.
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(a) Any and all notices, demands or communications submitted by any party
to another party pursuant to or as required by this Agreement shall be proper if in writing and
dispatched by messenger for immediate personal delivery, or by registered or certified United
States mail, postage prepaid, return receipt requested, to the principal office of the Agency and
the Developer, as applicable, as designated in Article I hereof. Such written notices, demands
and communications may be sent in the same manner to such other addresses as either party may
from time to time designate as provided in this Section. Any such notice, demand or
communication shall be deemed to be received by the addressee, regardless of whether or when
any return receipt is received by the sender or the date set forth on such return receipt, on the day
that it is dispatched by messenger for immediate personal delivery, or two (2) calendar days after
it is placed in the United States mail as heretofore provided.
(b) In addition to the submission of notices, demands or communications to
the parties as set forth above, copies of all notices may also be delivered by facsimile as follows:
to the Developer:
Covenant Development, Inc
Grand Terrace, CA 92313
Attn: Skip Hubby
Telephone: (909) 503-1134
Fax: (909) 503-1142
the Agency:
Redevelopment Agency of the City
of San Bernardino
201 North "E" Street, Suite 301
San Bernardino, California 9240 I
Telephone: (909) 663-1044
Fax: (909) 384-5135
with copy to:
Lewis Brisbois Bisgaard & Smith LLP
650 E. Hospitality Lane, Suite 600
San Bernardino, California 92408
Attn: Alexis Crump
Telephone (909) 387-1130
Fax: (909) 387-1138
Section 5.02. Conflict of Interest. No member, official or employee of the
Agency having any conflict of interest, direct or indirect, related to this Agreement and the
development of the Property shall participate in any decision relating to the Agreement. The
parties represent and warrant that they do not have knowledge of any such conflict of interest.
Section 5.03. Warranty Against Payment of Consideration for Agreement. The
Developer warrants that it has not paid or given, and will not payor give, any third party any
money or other consideration for obtaining this Agreement. Third parties, for the purposes of
this Section, shall not include persons to whom fees are paid for professional services if rendered
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by attorneys, financial consultants, accountants, engineers, architects and the like when such fees
are considered necessary by the Developer.
Section 5.04. Nonliabilitv of Agencv Officials and Emplovees. No member,
official or employee of the Agency shall be personally liable to the Developer, or any successor
in interest, in the event of any default or breach by the Agency or for any amount which may
become due to the Developer or to its successor, or on any obligations under the terms of this
Agreement, except for gross negligence or willful acts of such member, officer or employee.
Section 5.05. Approvals.
(a) Approvals required of the Agency or the Developer, or any officers,
agents or employees of either the Agency or the Developer, shall not be unreasonably withheld
and approval or disapproval shall be given within the time set forth in the Schedule of
Performance or, ifno time is given, within a reasonable time.
(b) The Executive Director of the Agency is authorized to sign on his or her
own authority amendments to this Agreement which are ofroutine or technical nature, including
minor adjustments to the Schedule of Performance.
Section 5.06 Attornevs' Fees. If either party hereto files any action or brings
any action or proceeding against the other arising out of this Agreement, seeks the resolution of
disputes pursuant to hereto, or is made a party to any action or proceeding brought by the Escrow
Holder then as between the Developer and the Agency, the prevailing party shall be entitled to
recover as an element of its costs of suit or resolution of disputes, and not as damages, its
reasonable attorneys' fees as fixed by the Court or other forum for resolution in such action or
proceeding or in a separate action or proceeding brought to recover such attorneys' fees. The
costs, salary and expenses of the City Attorney and members of his office in enforcing this
Agreement shall be considered as "attorneys' fees" for purposes of this Section.
Section 5.07. Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, executors, administrators, legal
representatives, successors and assigns.
ARTICLE VI
ENTIRE AGREEMENT. WAIVERS AND AMENDMENT
Section 6.01. Entire Agreement.
(a) This Agreement shall be executed in three (3) duplicate originals each of
which is deemed to be an original.
(b) This Agreement integrates all of the terms and conditions mentioned
herein or incidental hereto, and supersedes all negotiations or previous agreements between the
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parties with respect to all or any portion of the Replacement Housing Site and the development
thereof.
(c) All waivers of the provisions of this Agreement and all amendments
hereto must be in writing and signed by the appropriate authorities of the Agency and the
Developer.
IN WI1NESS WHEREOF, the parties hereto have duly executed this Agreement
as of the dates set forth below.
AGENCY
Redevelopment Agency of the
City of San Bernardino
Date:
By:
Judith Valles
Chair of the Community
Development Commission
Date:
By:
Gary Van Osdel
Executive Director
APPROVED AS TO FORM:
Agency Counsel
DEVELOPER
COVENANT DEVELOPMENT, INC
a California corporation
By:
Skip Hubby, Its President
[ALL SIGNATURES MUST BE NOTARIZED]
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EXHffiIT "A"
LEGAL DESCRIPTION OF THE PROPERTY
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EXHffiIT "B"
SCHEDULE OF DEVELOPMENT
1.
No later than February 28, 2003
2.
No later than April 1, 2003
3.
No later than July 1,2003
4.
No later than October 1, 2003
5.
No later than October 1, 2005
2
Locate a Replacement Housing Site.
Execution of Purchase Contract and
open escrow for the Purchase of the
Replacement Housing Site
Close Escrow on the Replacement
Housing Site.
Commence construction on the
Replacement Housing Site or pay the
Agency $394,384.94 plus interest at
the prime rate existing on the date of
this Agreement.
Complete construction of 22 homes
which shall be restricted to low- and
moderate Income home buyers.
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EXHIBIT "C"
DEED OF TRUST
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CITY OF SAN BERNARDINO
Interoffice Memorandum
CITY CLERK'S OFFICE
Records and Information Management (RIM) Program
DATE:
December 6, 2002
TO:
Margaret Parker, Secretary
FROM:
Michelle Taylor, Senior Secretary
RE:
Resolution CDC/2002-39
At the Mayor and Common Council meeting of December 2, 2002, the City of San Bernardino
adopted Resolution CDC/2002-39- Resolution authorizing and approving the Agency Executive
Director to execute the development agreement by and between the Redevelopment Agency and
Covenant Development, Inc., regarding the development of 22 affordable housing units.
Attached is a copy of the resolution and agreement for reference. Please obtain signatures on the
original agreement and return it to the City Clerk's Office, to my attention.
If you have any questions, please do not hesitate to contact me at ext. 3206. Thank you.
Michelle Taylor
Senior Secretary
I hereby acknowledge receipt of this memorandum.
Signed: 'I1ftk'f /fuhAJ
Date: /.dj;O/OB
Please sign and return
.
J'"'
.
** FOR OFFICE USE ONLY - NOT A PUBLIC DOCUMENT **
RESOLUTION AGENDA ITEM TRACKING FORM
Meeting Date (Date Adopted): 12-- 2--02-
Vote: Ayes 3-') Nays
Item # e..3s A Resolution #
~ Abstain-e-
C'Ct:/ ZlXJ'Z -3 '9
Absent 1-2..
Change to motion to amend original documents: -
Reso. # On Attachments: ~ Contract term: -
Note on Resolution of Attachment stored separately: ~
Direct City Clerk to (circle I): PUBLISH, POST, RECORD W /COUNTY
Date Sent to Mayor: 12 <3> --0 2-
Date of Mayor's Signature: 12 ~4"CL-
Date of ClerklCDC Signature: \ '2 -s--a 2.-
Null/Void After: -
By: -
Reso. Log Updated: ,/'"'
Seal Impressed:
Date MemolLetter Sent for Signature: I? -(" '0 r
60 Day Reminder Letter Sent on 30th day:
90 Day Reminder Letter Sent on 45th day:
See Attached: /" Date Returned: \- 9')-03
See Attached:
See Attached:
Request for Council Action & Staff Report Attached:
Updated Prior Resolutions (Other Than Below):
Updated CITY Personnel Folders (6413, 6429, 6433,10584,10585,12634):
Updated CDC Personnel Folders (5557):
Updated Traffic Folders (3985, 8234,655,92-389):
Copies Distributed to:
City Attorney
Parks & Rec.
Code Compliance Dev. Services
Police Public Services Water
Notes:
YesL No By
Yes No---L- By
Yes No ,/ By
Ves No 4' By
Ves No_ By_
EDA/
Finance
MIS
Others:
BEFORE FILING, REVIEW FORM TO ENSURE ANY NOTATIONS MADE HERE ARE TRANSFERRED TO THE
YEARLY RESOLUTION CHRONOLOGICAL LOG FOR FUTURE REFERENCE (Contract Term, etc.)
Ready to File:m-r
Date: J-dr<B
Revised 01/12/01