HomeMy WebLinkAbout08 LEGACY VILLAS (AMALFI) CERTIFICATE OF COMPLIANCE AND PERMISSION TO FINANCEAGENDA REPORT Ree ewed m S
0 City Manager JCP
Finance Director NIA
MEETING DATE: APRIL 21, 2015
TO: JEFFREY C. PARKER, CITY MANAGER
FROM: CITY MANAGER'S OFFICE — ECONOMIC DEVELOPMENT DIVISION
SUBJECT: TUSTIN LEGACY, PARCEL 2(A) - LEGACY VILLAS LLC (THE IRVINE
COMPANY), APPROVAL OF PNC BANK FOR PERMANENT
FINANCING AND AUTHORIZING APPROVAL OF THE CERTIFICATE
OF COMPLIANCE
SUMMARY
Consideration by the City Council to: 1) approve PNC Bank, National Association (PNC)
and the assignment of the loan to Fannie Mae as the permanent lender pursuant to
Section 2.2.4 of the Disposition and Development Agreement (DDA) between the City of
Tustin and Legacy Villas, LLC; and, 2) approve authorizing a Certificate of Compliance
pursuant to Section 9.2.2 of the DDA between the City of Tustin and Legacy Villas, LLC.
RECOMMENDATION
It is recommended that the City Council take the following actions:
1. Approve PNC Bank, National Association, as a lender and the assignment of the
loan to Fannie Mae for permanent financing, preceding the issuance of a
Certificate of Compliance pursuant to Section 2.2.4 of the Disposition and
Development Agreement between the City of Tustin and Legacy Villas, LLC; and,
2. Authorize the City Manager to approve the Certificate of Compliance when all
conditions have been met pursuant to Section 9.2.2 of the Disposition and
Development Agreement between the City of Tustin and Legacy Villas, LLC.
FISCAL IMPACT
No fiscal impact. An approval of the Certificate of Compliance acknowledges that all
financial obligations have been fulfilled under the DDA for Parcel 2A between the City of
Tustin and Legacy Villas LLC (The Irvine Company).
Agenda Meeting — April 21, 2015
Parcel 2A — Permanent Financing and Certificate of Compliance
CORRELATION TO THE STRATEGIC PLAN
This action correlates to the City's Strategic Plan for Economic and Neighborhood
Development (Goal A).
DISCUSSION
The City and Legacy Villas LLC ( "Developer"), entered into a DDA for Parcel 2A on
November 6, 2012 for the acquisition of the parcel and development of 533 apartment
homes. The DDA was subsequently amended on June 4, 2013, which accelerated the
payment of the backbone infrastructure obligation by the Developer and revised the
Developer's off -site infrastructure obligations. The Developer has completed nearly all
improvements as required under the DDA, with a few items remaining to be completed
which the Developer acknowledges and is taking actions to complete.
The Developer has requested the City's consent to record permanent financing on the
property by a third party and with respect to such permanent financing, has further
requested that the City waive its right to terminate the DDA and the Right of Reversion and
Right of Purchase in the event a Certificate of Compliance, as defined in the DDA, cannot
be issued by April 30, 2015. Without a Certificate of Compliance, third party financing can
only be secured with the City's consent. Staff is satisfied that the required improvements
are complete enough to allow the Developer to secure permanent financing and to waive
the City's Right of Reversion and Right of Purchase, each of which are default remedies
that the City would be highly unlikely to exercise given the extent to which the Developer
has completed the improvements (see below).
The originating lender will be PNC Bank, National Association (PNC), which will promptly
after closing of the loan, assign the loan to Fannie Mae with PNC as the servicer /agent of
the loan. Legacy Villas LLC will continue to own and manage the property and is not
transferring any obligations under the DDA to the lender. This request will allow the
Developer to finance the project at a favorable interest rate. In the event, a Certificate of
Compliance, as defined in the DDA, can be obtained by the Developer prior to April 30,
consent from the City for financing is no longer required and the DDA, including the Right
of Reversion and Right of Purchase, would terminate in accordance with the DDA terms.
Staff is requesting that the City Manager be authorized to issue a Certificate of
Compliance for recording, when the Developer has fulfilled all of the requirements as
defined in Section 9.2.2 of the DDA. These requirements include: 1) Final Inspection of
the Property by the City; 2) Issuance of Certificate of Substantial Completion for the
project by the Project Architect; 3) Issuance of Final Certificates of Occupancy; 4) Release
or bonding in accordance with California law of all liens or rights to record liens from the
General Contractor and subcontractors; 5) Payment of all funds owing to the City; and, 6)
No Potential Default or Material Default.
Agenda Meeting —April 21, 2015
Parcel 2A — Permanent Financing and Certificate of Compliance
The current project status is as follows: 1) vertical improvements have been completed,
inspected, and signed off by the City; 2) letters have been received from the project
architects; 3) Certificates of Occupancy have been issued on 13 of the 14 buildings; 4) the
Developer's general contractor is in the process of securing lien releases from the
subcontractors; 5) Developer has paid all funds owing to the City; and, 6) the Developer is
not default.
The Developer is ahead of the Schedule of Performance referenced in the DDA; staff
anticipates that the Developer will meet all conditions for achieving a Certificate of
Compliance by May 30, 2015.
Joh A. Buchanan
ty Director of Economic Development
City Manager's Office