Loading...
HomeMy WebLinkAboutR35-Economic Development Agency e e tit . , 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 ..__._________________.__._____._.____.__._.._____.__._~RD~~ON.I}MPRQyE~!~_'!!?..__.__.__.._ SvnoDsis of Previous Commission/Couneil/Committee Action(s): On October 24, 2002, the Redevelopment Committee voted unanimously to recommend that the Community ___!?".~_~~!!!en~.~."_~~_\"_n._~~i~_'-':.!'.EE,_0.~~J.."_f.0J_~!.~'-':::._...--------.---.---.---..---..----.......n____..___..._m.mn____._mm______mm 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. _________n________________________h___________________________________________________________________________________ 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: ------------------------ P:\clericBI Services Dcpt\Marg:uet ParkllMgend&\CDC 2002\02-12-02 Covenanl Dcv.doc COMMISSION MEETING AGENDA Meeting Date: 1210212002 I'. 'i 5". Agenda Item Number: f\... I zj zl {2- e e e 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. - 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: e e e 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 -------------------------- P:\clerieal Service'S DepllMargare\ ParkeMgcnd.l\COC 2002\02-12-02 Covmant [x:v.doc COMMISSION MEETING AGENDA Meeting Date: 12/0212002 Agenda Item Number: e e e 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: e e e 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: e 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. jU Maggie Pacheco Deputy Director/Director Housing & Community Development e e P:\Cltrical Services DepI\Margaret ParkeMgelllb.\CDC 2002\02-12.(12 Covenant Dev.doc: COMMISSION MEETING AGENDA Meeting Date: 12/02/2002 Agenda Item Number: _ 12 _ 13 14 15 16 17 18 19 20 21 22 23 _25 ~(Q)~V , RESOLUTION NO. 2 3 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 4 5 6 7 8 WHEREAS, the Redevelopment Agency of the City of San Bernardino (the "Agency") i 10 Section 33000, et seq.) and is authorized thereunder to purchase and sell property in order t 9 organized and existing under the Community Redevelopment Law (Health and Safety Cod 11 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' 24 and /1/ -1- P:\Clerleal Services IRptl.\IIa'1arel Puxer\Raolutlons\2002'M.t1..{l2 Covenant Dev CC.do( e e13 14 e25 WHEREAS, Covenant pre-sold the majority of the lots on the Property without th 2 requirement that certain parcels would be restricted to low and moderate income housing; and 3 WHEREAS, the Agency and Covenant desire to provide replacement property (th 4 "Replacement Housing Site") 22 lots of which shall be restricted to low and moderate incom 5 housing or in the alternative Covenant shall be required to repay the Agency $394,384.94 plu 6 interest by no later than October I, 2003; and 7 8 WHEREAS, Covenant Development and the Agency desire to amend and supercede th 10 Development Agreement dated December 2, 2002 to evidence the terms of the amende 9 Letter Agreement and the Agreement regarding Deposit of Funds by the execution of that certai II agreement between the parties.; and 12 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 16 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 17 18 recommendation of Special Counsel. Section 2. Official Action. The Executive Director, and any and all other officers 0 19 20 the Agency are hereby authorized and directed, for and in the name and on behalf of the Agency 21 to do any and all things and take any and all actions, including execution and delivery of any an 22 all assignments, certificates, requisitions, agreements, notices, consents, instruments 0 23 conveyance, warrants and other documents, which they, or any of them, may deem necessary 0 24 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 -2- P:\C1e:riul Servl<<t Depl\.\Ilrgu~1 PlIrker\Resolullons\2002\02_12_02 Co~enant De.. CC.doc e take any action, such execution, countersigning or action may be taken on behalf of such office 2 by any person designated by such officer to act on his or her behalf in the case such officer shal 3 be absent or unavailable. The Agency hereby appoints its Executive Director as agent of th 4 Agency for purposes of executing any and all documents and instruments which any officer 0 -3- P:\Clertcal Services Dept\.\1.arzard Puker\R6olutlonl\2001:\02_n_oz Covenant Dev CC.doc 8 on the day of 9 Commission Members: Ayes 10 ESTRADA 11 LIEN 12 MCGINNIS e13 DERRY SUAREZ 14 15 ANDERSON 16 MC CAMMACK 17 e2 e25 3 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 4 5 Section 3. This Resolution shall take effect upon the date of its adoption. 6 7 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 18 Rachel G. Clark, City Clerk 19 The foregoing resolution is hereby approved this day of ,2002. 20 21 22 Judith Valles, Chairperson Community Development Commission of the City of San Bernardino 23 24 By: -4- P:\Clertca' Senlea Dept\'-'uglnit Puker\ResolutlonsUOOl\02_12_02 Covenant Dev CC.doc: e DEVELOPMENT AGREEMENT BY AND BETWEEN REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND COVENANT DEVELOPMENT, INC. e e Exhibit "A" e e e 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 P:\Clerical Services Dept\MargaretParkeMgenda\Agnnts-Amend\02-12-02 Covenant Dev Agreement 1 e e e 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. P:\Clerical Services Dept\MargaretParkeMgenda\Agrmts-Amend\02-12-02 Covenant Dev Agreement 2 e e .e 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 P:\Clerical Services Dept\MargaretParker\Agenda\Agrmts-Amend\02-12-02 Covenant Dev Agreement 3 e e e 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: P:\Clerical Services Dept\M:argaretParkeMgcnda\Agrmts.Amend\02.12-02 Covenant Dev Agreement 4 e e e (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. P:\Clerical Services Dept\MargaretParker\Agenda\Agrmts-Amend\02.12.02 Covenant Dev Agreement 5 e e e (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, P:\Clerical Services Dept\MargaretParker\Agenda\Agrmts-Amend\02-12-02 Covenant Dev Agreement 6 e e e 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. P:\Clerical Services Dept\MargaretParker\Agenda\Agnnts-Amend\02~12.02 Covenant Dev Agreement 7 e e e 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. P:\Clerical Services Dept\MargaretParkeMgenda\Agrmts-Amend\02-12-02 Covenant Dev Agreement 8 e e e (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 P:\Clerical Services Dept\MargaretParkeMgenda\Agrmts-Amend\02-12.02 Covenant Dev Agreement 9 I.' e e e 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 P:\Clerical Services Dept\MargaretParkeMgenda\Agnnts-Amend\02.12.02 Covenant Dev Agreement 10 e e e 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] P:\Clerical Services Dept\MargaretParker\Agenda\Agnnts-Amend\02-12-02 Covenant Dev Agreement II e EXHffiIT "A" LEGAL DESCRIPTION OF THE PROPERTY e e 1 e e e 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. .' . e EXHIBIT "C" DEED OF TRUST e e 1 I ~ 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