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HomeMy WebLinkAbout07726ORDINANCE NO. 7726 AN ORDINANCE APPROVING AN AGREEMENT BETWEEN LUCKY STAR LIMITED PARTNERSHIP, L.L.L.P., THE CITY OF PUEBLO, A MUNICIPAL CORPORATION, THE BOARD OF COUNTY COMMISSISONERS OF PUEBLO COUNTY, AND THE HOUSING AUTHORITY OF THE CITY OF PUEBLO FOR PAYMENT IN LIEU OF TAXES, AND AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAME BE IT ORDAINED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1. The Agreement dated December 31, 2007 between Lucky Star Limited Partnership, LLLP, the City of Pueblo, a Municipal Corporation, the Board of County Commissioners of Pueblo County and the Housing Authority of Pueblo, ( "the Agreement "), for payments in lieu of taxes, a copy of which is attached and incorporated herein, having been approved as to form by the City Attorney, is hereby approved SECTION 2. The President of the City Council is hereby authorized to execute Agreement in the name of the City and the City Clerk is directed to affix the seal of the City thereto and attest same. INTRODUCED January 14, 2008 BY Judy Weaver Councilperson r°T y ATTE D BY: �. � y PRESIf NT'ei Cif' Council PASSED AND APPROVED: January 28, 2008 Ord 1 Background Paper for Proposed ORDINANCE AGENDA ITEM # DATE: JANUARY 14, 2008 DEPARTMENT: HOUSING AND CITIZEN SERVICES / ADA RIVERA CLARK TITLE AN ORDINANCE APPROVING AN AGREEMENT BETWEEN LUCKY STAR LIMITED PARTNERSHIP, L.L.L.P., THE CITY OF PUEBLO, A MUNICIPAL CORPORATION, THE BOARD OF COUNTY COMMISSIONERS OF PUEBLO COUNTY, AND THE HOUSING AUTHORITY OF THE CITY OF PUEBLO FOR PAYMENT IN LIEU OF TAXES, AND AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAME ISSUE Shall City Council approve a payment in lieu of taxes agreement with Lucky Star Limited Partnership, LLLP, the prospective affordable housing developer of the Bethlehem Square Apartments. RECOMMENDATION Approve BACKGROUND Lucky Star Limited Partnership ( the "Sponsor ") submitted an application for HOME funds in the summer of 2007. The City Council approved a $250,000 HOME loan to the project on December 10, 2007. The project is known as the Bethlehem Square Apartments. Sponsor wishes to purchase and rehabilitate the 130 units of HUD subsidized housing. The Sponsor has entered into partnership with the Housing Authority of Pueblo, and the Authority is a partner in the LLLP, thus making the project exempt from property taxes. The Sponsor wishes to enter into a payment in lieu of taxes agreement with the City and the County, of Pueblo. The Sponsor desires to annually pay a negotiated amount in lieu of otherwise applicable ad valorem taxes, and represents that such action is necessary in order to enable Sponsor to undertake the Project and thereby provide housing for low- income persons and families. The payment will be $19,718.56. The City and County each are receiving one - half ($9,859.28). FINANCIAL IMPACT Approving this agreement will provide with annual payments of $9,859.28 to the City. The proposed composition of the LLLP will make the Project exempt from ad valorem taxes. PAYMENT IN LIEU OF TAXES AGREEMENT THIS AGREEMENT (the "Agreement') is made and entered into this 28th day of January, 2008, by and between Lucky Star Limited Partnership, a Colorado limited liability limited partnership whose address is 707 Sable Oaks Drive, South Portland, Maine (the "Sponsor "), the Board of County Commissioners of Pueblo County ( "County "), the City of Pueblo, a Municipal Corporation ( "City "), and the Housing Authority of Pueblo, a Colorado public housing authority ( "Authority "). (City and County may be collectively referred to herein as the "Government Entities," and Sponsor, City, County and Authority may be collectively referred to herein as the "Parties. ") A. Sponsor has contracted to purchase certain residential real property, which is more particularly described in Exhibit "A" attached hereto and incorporated herein by reference (the "Property"). Sponsor intends to undertake an affordable housing rehabilitation project upon the Property known as the Bethlehem Square Apartment Project (the "Project'). B. Sponsor has applied to the Colorado Housing and Finance Authority ( "CHFA ") for loans, and has received a loan commitment from CHFA, in the aggregate amount of $6,055,195.00 for the purpose of financing a portion of the Project. The CHFA loans will be secured by a first deed of trust upon the Property. Sponsor has also applied to CHFA for Low Income Housing Tax Credits in the approximate amount of $307,840.00 to fund a portion of the costs of the Project. C. Sponsor has applied to Authority for a loan, and Authority has made a conditional loan commitment to Sponsor, in an amount not to exceed $250,000.00, to be secured by a deed of trust upon the Property. This loan is also intended to fund a portion of the costs of the Project. D. City has entered into an Affordable Rental Housing Rehabilitation Loan Agreement with Sponsor under which City has conditionally committed to make a loan to Sponsor in an amount not to exceed $250,000.00 for eligible approved expenditures for the Project. Such loan is to be secured by a deed of trust upon the Property of co -equal priority to the deed of trust securing the loan to be made by Authority. E. In order to further assist the Project and render same economically feasible, Authority has agreed to assist Sponsor in obtaining exemption of the Property, from ad valorem property taxes under the constitution and laws of the State of Colorado, including but not limited to §29 -4 -227, C.R.S. by taking a limited partnership interest in Sponsor, subject to and in accordance with the conditions and requirements set forth in this Agreement, including but not limited to Sponsor making certain payments in lieu of taxes. F. Sponsor desires to annually pay a negotiated amount in lieu of otherwise applicable ad valorem taxes, and represents that such action is necessary in order to enable Sponsor to undertake the Project and thereby provide housing for low- income persons and families. NOW, THEREFORE, in consideration of the foregoing recitals and the terms, conditions and mutual promises contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows: 1. Sponsor agrees to acquire and rehabilitate the real property described in Exhibit "A" hereto so as to provide one hundred thirty (130) affordable housing units, in accordance with the requirements of the aforesaid Affordable Rental Housing Rehabilitation Loan Agreement. 2. Prior to substantial completion of the Project, Authority shall acquire an ownership interest in Sponsor as a special limited partner, in accordance with the provisions of Sponsor's Partnership Agreement, a true copy of which is on file at the Office of the City Clerk, One City Hall Place, Pueblo, CO. 81003. Authority shall maintain such ownership interest during the term of this Agreement. 3. This Agreement shall not take effect, and Sponsor shall not receive any of the tax exemption benefits hereunder, until and unless all of the following conditions precedent have been fulfilled: (a) Sponsor shall have acquired fee simple title to the Property; and (b) Sponsor shall have received the CHFA and Authority Loan for the Project; and (c) Sponsor shall have executed and recorded covenants or deed restrictions on the Property, in form acceptable to City's legal counsel, that requires the Sponsor and all subsequent owners of the Property to maintain affordability of all rental units in the Project to low and moderate income persons and to offer for rent all rental units in the Project to Qualified Households for a period of not less than forty (40) years from the date of substantial completion of the Project. As used herein, "Qualified Households" means a household whose annual income meets the requirements of the federal Low Income Housing Tax Credit program, 26 U.S.C. §42(g)(1)(B), including that the initial annual income of the eligible household is sixty percent (60 %) or less of the median income for the Pueblo Metropolitan Statistical Area. 4. This Agreement shall take effect when each of the conditions set forth in Section 3 are fulfilled (the "Effective Date "), and shall continue for a term of forty (40) years from the date of substantial completion of the Project; provided, however, that if all of the conditions precedent are not fulfilled by June 30 , 2009, this Agreement shall be null and void. The exemption of the Property from ad valorem taxes, and Sponsor's obligations to make the annual payments in lieu of taxes as provided herein, shall not extend beyond the term of this Agreement. As used in this Agreement, the phrase "substantial completion of the Project" means the date upon which the architect for the project issues his certificate of substantial completion. —2— 5. During the term of this Agreement, Sponsor shall make, and the Government Entities shall each accept, annual payments in lieu of all ad valorem real property taxes otherwise due on the Property (the "Payment'). During said term, so long as this Agreement is in effect, the Property shall be exempt from said ad valorem property taxes. 6. (a) The Payment shall be the amount of $19,718.56. Sponsor shall, for its Payment, pay one -half of such amount (that is, $9,859.28) to City and one -half of such amount (that is $9,859.28) to County. (b) The portion of each Payment payable to County shall be made payable to Pueblo County and delivered to: Director of Finance Pueblo County 215 W. 10 St., Rm. 217 Pueblo, Colorado 81003 or at such other address as County may in writing direct; the portion of each Payment payable to City shall be made payable to City of Pueblo and delivered to: Director of Finance City of Pueblo 1 City Hall Place Pueblo, Colorado 81003 or at such other address as the City may in writing direct. 7. The Payments made under this Agreement permit the Project to enjoy availability of municipal and county services to the same extent as private property located within the City of Pueblo, Colorado, which is not exempt from ad valorem taxes; provided, however, that nothing herein creates any special obligation by the Government Entities to Sponsor, nor constitutes any guarantee or promise that any service will in fact be provided when needed, nor as to any particular level of service, if any. 8. Payments made pursuant to this Agreement shall constitute an operating expense of the Project, payable out of gross rental revenue, prior to calculation of net distributable cash flow. Payments shall be made annually on or before January 15` of each year, commencing in the year in which Authority becomes a special limited partner. If not timely paid, the Sponsor shall incur late charges of 1% per month for the first three months any Payment is delinquent and 1 -1 /2% per month thereafter. In the event any Payment is delinquent for one year or longer, Authority shall withdraw as a limited partner from Sponsor and surrender to Sponsor all of its ownership interest in Sponsor, the term of this Agreement shall end, and the Project shall thereafter be fully subject to ad valorem taxes. Additionally, in such event, City and County may commence an action in any court of competent —3— jurisdiction located in Pueblo County, Colorado, to recover the amount of past due Payments, together with late charges, costs and reasonable attorneys' fees. 9. Nothing herein shall be construed to exempt the Project from applicable state, county or municipal sales taxes, use taxes or excise taxes. 10. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement. The provisions set forth in this Agreement constitute the entire and complete Agreement with respect to its subject matter, and supercede all prior written and oral agreements, understandings and representations related thereto; provided, however, that this Agreement is not intended, and shall not be construed, to modify the terms and conditions of the Affordable Rental Housing Loan Agreement referred to in Recital D above, except that a default by Sponsor hereunder shall, at City's option in the exercise of its sole discretion, also constitute a default by Owner under said Affordable Rental Housing Loan Agreement. No amendment or modification of this Agreement, and no waiver of any provision of this Agreement, shall be effective unless made in writing and executed by the authorized representatives of all of the Parties. Attest: City rk CITY OF PUEBLO, a Municipal Corporation By: -- President of the City Council SPONSOR: LUCKY STAR LIMITED PARTNERSHIP, a Colorado limited liability limited partnership By: No Room at the Inn, LLC, a Maine limited liability company, Its General Partner By: Evergreen Partners, a Maine limited liability company, Its Sole Member By: Its: L e-L Sew M BOARD OF COUNTY COMMISSIONERS OF PUEBLO COUNTY By: a Chairman of thcZoard HOUSING AUTHORITY OF THE CITY OF PUEBLO, a ado pub is housing a ty By: Chairman of the Board ATTEST: .I —5— Exhibit " A " The following real estate located in the County of Pueblo, Colorado, Block 11, EXCEPT Lots 11 through 20, inclusive, and Lots 31 through 40, inclusive, and the Easterly 15 feet of Lots 10 and 30 and except the North 1/2 of 12th Street and all of the alley adjacent; Block 20, EXCEPT Lots 9 through 20, inclusive and Lots 31 through 40, inclusive, and the Easterly 15 feet of Lot 8 and EXCEPT the South 1/2 of 12th Street and all of the alley adjacent; ADEE, CHAMBERLIN AND WILEY'S SUBDIVISION in the City of Pueblo, Pueblo County, Colorado, as recorded in Plat Book 4 at Page 9 of the Records of Pueblo County, Colorado, also Blocks 19 and 24, Lots 17 through 20, inclusive and Lots 34 through 40, inclusive, in Block 20, Lots 12 through 20, inclusive, and Lots 33 through 40, inclusive, Block 23, in ADEE, CHAMBERLIN AND WILEY'S SUBDIVISION, SECOND FILING, in the City of Pueblo, Pueblo County, Colorado, as recorded in Plat Book 4 at Page 18 of the Records of Pueblo County, Colorado, together with all alleys located in Block 19 and 24; all of that portion of alley lying East of a line drawn from the Southwest Corner of Lot 17 to the Northwest corner of Lot 37, in Block 20; all of that portion of alley lying East of a line drawn from the Southwest Corner of Lot 13 to the Northwest Corner of Lot 33, in Block 23, all in ADEE, CHAMBERLIN AND WILEY'S SUBDIVISION, SECOND FILING, also together with that portion of 12th Street that abuts Lots 34 through 40, Block 20; Lots 12 through 20, Block 23; Lots 21 through 27, Block 19; and Lots 1 through 8, Block 24; ADEE, CHAMBERLIN AND WILEY'S SUBDIVISION, SECOND FILING, also together with that portion of Graham Avenue, lying Southerly of the Northerly line of Block 19 extended Westerly, and lying Northerly of the Southerly line of Block 24 extended Westerly, in ADEE, CHAMBERLIN AND WILEY'S SUBDIVISION, SECOND FILING, except the following described tract: A parcel of land being a portion of 12th Street, and a portion of Lots 12, 13, 14 and 15, in Block 23 ADEE, CHAMBERLIN AND WILEY'S SUBDIVISION, SECOND FILING, as shown on the recorded plat thereof, being in Pueblo County, Colorado, and described as follows: Beginning at the Northwest corner of Lot 12 in said Block 23, thence Easterly, along the Northerly line of said Lot 12, a distance of 6.18 feet; thence angle right, 57 degrees 25' 16" Southeasterly to the tangent of a curve to the left; thence along the arc of said curve to the left, which curve has a central angle of 237 degrees 25' 16 ", a radius of 52.00 feet, an arc distance of 215.48 feet to the Southwest comer of Lot 34 in Block 20, ADEE, CHAMBERLIN AND WILEY'S SUBDIVISION, SECOND FILING, as recorded; thence Southerly, along the Southerly extension of the Westerly line of said Lot 34, a distance of 40.00 feet to the centerline of the aforesaid 12th Street; thence Westerly, along the centerline of said 12th Street, a distance of 50.00 feet to intersect the Northerly extension of the Westerly line of Lot 12 in said Block 23 thence Southerly, along said Northerly extension, 40.00 feet to the point of beginning.