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HomeMy WebLinkAbout08 WAIVER FOR EARLY CONVEYANCE OF DISPOSITION PARCEL 1A TO ANTON LEGACY TUSTINAGENDA REPORT Agenda Item Reviewed: City Manager Finance Director 8 MEETING DATE: MAY 7, 2013 TO: JEFFREY C. PARKER, CITY MANAGER FROM: JOHN A. BUCHANAN, PROGRAM MANAGER SUBJECT: WAIVER OR MODIFICATION OF SPECIFIC CLOSING CONDITIONS CONTAINED IN THE DISPOSITION AND DEVELOPMENT AGREEMENT (DDA) FOR EARLY CONVEYANCE OF DISPOSITION PARCEL 1A TO ANTON LEGACY TUSTIN, LP (DEVELOPER) SUMMARY: Approval is requested to waive or modify specific closing conditions in the Disposition and Development Agreement (DDA) between the City and Anton Legacy Tustin, LP (Developer aka St Anton Partners) and accelerate payment by the Developer of the Backbone Infrastructure obligation. RECOMMENDATION: Authorize the City Manager to do the following: 1. Waive section 7.2.2(n) of the DDA, which conditions conveyance of Parcel 1A subject to the conveyance of Parcel 2A (The Irvine Company, aka Legacy Villas LLC). Conveyance will not occur earlier than May 21, 2013 or with the second reading of Ordinance No. 1431, adopting CFD 13 -01. 2. Modify sections 7.2.1(e) and 7.2.2(m) of the DDA to exempt a grading permit and building permit to the Close of Escrow; however, the Developer must be in a position to receive all required building permits. Waivers 1 and 2 above will be granted with the stipulation that the Developer will consent to the following: 1. The Developer will instruct escrow to release the Backbone Infrastructure obligation in the amount of $4,324,393, prior to the completion of Park Avenue between Warner Avenue and Legacy Avenue, as described section 8.5.2 of the DDA, as follows: a) release 50% or $2,162,197 at the close of escrow, and b) release the remaining 50% or $2,162,196 when all improvements to the roadway have been completed with the exception of the final paving surface and stripping Agenda Report — Waiver of Closing Conditions, Disposition Package 1A -North May 7, 2013 Page 2 of 2 of the roadway. The determination of when the project is nearly complete as described above will be at the discretion of the Public Works Department. 2. The Developer will consent to waive its right to protest the formation of CFD 13- 01, pursuant to the Rate and Method proposed for consideration by the City Council on May 7, 2013 for Affordable Moderate Multi - Family units. FISCAL IMPACT: In accord with the DDA, section 8.5.2, the Developer is required to make a Backbone Infrastructure payment in the amount of $4,324,393, as noted in the Recommendation section the infrastructure payment will be accelerated. Under the proposed early conveyance, the City will receive 50% ($2,162,197) of the backbone infrastructure amount approximately 6 months earlier than anticipated under the existing DDA and the balance or 50% ($2,162,196) being received 3 months earlier than anticipated. The purchase price of $1.00 will remain unchanged from the DDA as well as all development obligations of the Developer including onsite improvements and the development of the adjacent 4.7 acre park. BACKGROUND: In November 2012, the City entered into a DDA with the Developer for the construction of 225 affordable rental units on Parcel 1A and the construction of an adjacent 4.7 acre municipal park to be dedicated to the City. The Developer has requested that conveyance take place on May 22 or shortly thereafter which will precede the anticipated conveyance of Parcel 2A in early June 2013. The use of tax exempt financing and tax credit financing for the development of Parcel 1A is critical to funding the project including the timing associated which the issuance of bonds and federal tax credits. On March 13, the Developer, along with City assistance, was successful allocated $29.7 million in tax - exempt bonds by the California Debt Limit Allocation Committee (CDLAC). On the same day bonds were allocated for the project, the California Tax Credit Allocation Committee (CTCAC) reserved federal tax credits for the equity investor, The Irvine Company. The Developer has a commitment from Citibank to fund the project debt including the amount allocated by CDLAC. The bond allocation from CDLAC expires on July 1, 2013 which would require an extension of the allocation; therefore both the Developer and staff would prefer to close on Parcel 1A well in advance of the CDLAC expiration and with timing of the closing on Parcel 2A.