ARLINGTON COUNTY, VIRGINIA

Transcription

1 ARLINGTON COUNTY, VIRGINIA County Board Agenda Item Meeting of January 26, 2013 DATE: January 8, 2013 SUBJECT: Amend and Restate the Deed of Easement and Declaration of Restrictive Covenants for to permit its subordination to VHDA's refinancing and Approve its Prepayment Amount of the outstanding AHIF Loan C. M. RECOMMENDATION: 1. Approve and Authorize the Prepayment of the $2,976,400 Affordable Housing Investment Fund (AHIF) Loan that was provided to Quebec 172 Associates LP on October 24, 2001, plus any accrued interest due as of the payoff date (anticipated to be on or around January 31, 2013). 2. Appropriate the Prepayment up to a total of $3,890,045 ( ), as calculated on the payoff date, to the FY 2013 Affordable Housing Investment Fund ( ). 3. Approve and Authorize the Amended and Restated Deed of Easement and Declaration of Restrictive Covenants in order to permit its subordination to the Virginia Housing Development Authority (VHDA) loan. ISSUES: This is a request to approve the attached Amended and Restated Deed of Easement and Declaration of Restrictive Covenants for so that the original VHDA loan can be refinanced and to approve the prepayment amount of the AHIF Loan which the County allocated and approved for the project in SUMMARY: In order for Quebec 172 Associates LP, the developer and owner, to refinance its current VHDA loan, VHDA has required that the County amend the original Deed of Easement and Declaration of Restrictive Covenants which will allow its subordination to the refinanced loan. The new VHDA loan will be for a greater loan amount than the original loan in 2001 and therefore allows Quebec 172 Associates LP to remove the original investor, payoff the original County loan of up to $2,976,400 plus interest, and complete modest renovations. County Manager: ##### County Attorney: ***** Staff: David Cristeal and Marie Randall, DCPHD Quebec Board Report to Amend January 26, 2013.docx 11.

2 BACKGROUND: In June 2001, the County Board approved an AHIF Loan of up to $2,976,400 to Quebec 172 Associates LP for the acquisition and renovation of Quebec Apartments which are located at Columbia Pike and South Quebec. consists of 172 units with 129 Committed Affordable (CAF) Units for households earning at or less than 60% of the Area Median Income (AMI), and the remaining 43 units are unrestricted. Of the 129 CAF units, 2 are efficiencies, 59 are one-bedrooms, 50 are two-bedrooms, and 18 are three-bedroom units. This was the first renovation project in the County to create family-sized, or 2- and 3-bedroom units through bump-outs (additions to the buildings for the primary purpose to provide more bedrooms). In 2001, the cost of the project was approximately $20.4 million with $12.8 million from a VHDA first mortgage, $3.7 in investor equity, almost $1 million from a developer loan and then the remaining $2.9 million from a County AHIF loan. At this time, Quebec 172 Associates LP would like to remove the equity investor, pay off the County loan and complete some moderate renovations which will cost approximately $22.7 million. In order to do this, VHDA is providing a $19.8 million first mortgage and Quebec 172 Associates LP will provide $2.9 million in equity. DISCUSSION: The current Deed of Easement and Declaration of Restrictive Covenants allows for the refinance of the VHDA mortgage and also allows for its subordination of up to $12.8 million which is the original VHDA loan amount from Pursuant to a VHDA requirement, the explicitly states, among other things, that in the event there is a default under VHDA s deed of trust that results in a foreclosure or deed in lieu of foreclosure on the property, the County s would immediately thereafter terminate. However, the Amended Deed of Easement and Declaration of Restrictive Covenants, defining affordability requirements for the 129 CAF s, will continue to remain in effect until June 1, 2033 which is the original termination date. Amending the current Deed of Easement and Declaration of Restrictive Covenants will not alleviate or shorten the affordability period unless there is a foreclosure or deed in lieu of foreclosure on the property by VHDA. Additionally, the original Affordable Housing Investment Fund Agreement from 2001 did not include any language on prepayments. Originally, the Board approved an AHIF loan of up to $2,976,400, but only $2,958,237 was disbursed. Since 2001, Quebec 172 Associates LP has made over $1.4 million in payments. The balance of the loan as of January 31, 2013 (which is the expected payoff date) will be $3,862,545 which includes the $2,958,237 principal loan amount and $904,308 in accrued interest. Staff recommends the Board approve and authorize a prepayment amount of up to $3,890,045, which includes an additional 45 days of interest ($27,500) if there is a delay in the payoff. FISCAL IMPACT: The current AHIF balance is $17,012,723. Approval of the staff recommendation to authorize and appropriate the prepayment of the Quebec loan is anticipated to increase this balance by $3,862,545 (assuming a January 31, 2013 payoff date), resulting in a total AHIF balance of $20,875,

3 AMENDED AND RESTATED DEED OF EASEMENT AND DECLARATION OF RESTRICTIVE COVENANTS BY QUEBEC 172 ASSOCIATES L.P. THIS AMENDED AND RESTATED DEED OF EASEMENT AND DECLARATION OF RESTRICTIVE COVENANTS (this Declaration ) is made this day of 2013 (the Effective Date ) by QUEBEC 172 ASSOCIATES L.P., a Virginia limited partnership (the "Declarant") in order to satisfy a condition of a $2,976, residual receipts Affordable Housing Investment Fund loan made by the County Board of Arlington County, Virginia, a body politic (the County Board ), acting through its County Attorney, its County Manager, its Director of Housing Division and its Housing Development Coordinator (the County Staff ) to the Declarant. R E C I T A L S WHEREAS, the Declarant was formed as a Virginia limited partnership for the sole purpose of acquiring, renovating, owning, managing, and operating the Declarant s fee simple interest in the land and the improvements comprising a project known as, which is a 172-unit apartment complex, consisting of fifteen (15) apartment buildings located at Columbia Pike and South Quebec in Arlington County, Virginia RPC Numbers , , , , , , and , the legal description of which is set forth on Exhibit A attached hereto and made a part hereof (the Property or ); and WHEREAS, pursuant to that certain Affordable Housing Investment Fund Agreement, dated October 24, 2001, by and between the Declarant and the County Board (the AHIF Loan Agreement ), the County Board agreed to provide the Declarant with a residual receipts Affordable Housing Investment Fund residual receipts loan in an amount of up to $2,976, (the County AHIF Loan ) in order to assist the Declarant with the acquisition and renovation of ; and WHEREAS, as of the Effective Date, the Declarant owns, operates, designates and administers at least one-hundred twenty-nine (129) apartment units on the Property as income-restricted rental housing units ( Income-Restricted Units ) affordable to households with annual incomes of up to sixty percent (60%) of the area median income ( AMI ) for the Washington, DC metropolitan statistical area ( Low Income Households ); and WHEREAS, the Declarant shall by this Declaration impose upon the Income-Restricted Units certain occupancy, income and affordability restrictive covenants and requirements for the benefit of the County Board and Low-Income Households who desire to reside in Arlington County and rent and occupy available Income-Restricted Units on the Property. NOW, THEREFORE, the Declarant hereby declares that the Property shall be held, sold, and conveyed subject to the following restrictive covenants and conditions which are for the purpose of providing affordable housing rental units to Low Income Households until June 1, 2033 (the Affordability Compliance Period ), as further described herein, and such restrictive easements, covenants, conditions, and restrictions which shall run with the real Property submitted to this Declaration and which shall be binding on all parties having any right, title, or interest in the described Property or any part thereof, their heirs, successors, successors-in-title and assigns, as further described herein. 1 P age

4 D E C L A R A T I O N S For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Declarant hereby subjects the Property to the following restrictive covenants and conditions on the Property: 1. Income Eligibility and Occupancy Requirements As of the Effective Date. Borrower covenants and agrees that as of the Effective Date, at least one-hundred twenty-nine (129) units in the complex shall be designated as Income Restricted Units and shall be rented to and occupied by or, if vacant, available for occupancy by Low-Income Households with incomes at or below sixty percent (60%) of the AMI, as outlined below: Distribution of Maximum Unit Size Income-Restricted Units Household AMI Efficiency Units 02 Incomes at or below 60% of AMI One Bedroom Units 59 Incomes at or below 60% of AMI Two Bedroom Units 50 Incomes at or below 60% of AMI Three Bedroom Units 18 Incomes at or below 60% of AMI Total: Management. The Income-Restricted Units on the Property shall be owned, managed and operated continuously as affordable rental apartment units during the Affordability Compliance Period. The Declarant may manage the operations of the Property itself or may hire another party to do so. In the event said manager is not the Declarant, any agreement between the Declarant and said manager shall be subject to approval by the County Board, which approval shall not be unreasonably withheld, denied or delayed, and incorporate the terms of this Declaration. 3. Rents. Declarant covenants, declares and agrees that during the term of the Affordability Compliance Period, the rental rates charged of Tenants for all of the Income-Restricted Units in the Quebec Apartments shall (i) be established in accordance with the U.S. Housing and Urban Department ( HUD ) rent limits set for Arlington County, (ii) be indexed for household income and adjusted for family size as described under the definition of County Affordability Level (as defined in the AHIF Loan Agreement), and (iii) not exceed the established affordability level for the gross rents, as published by HUD. 4. Required Acceptance of Certain Grants and Vouchers. Declarant covenants, declares and agrees that during the term of the Affordability Compliance Period, the Declarant shall accept Arlington County Housing Grants and Section 8 Housing Choice Vouchers as part of the rental payment from qualified households and to suspend any requirement for minimum income for prospective Tenants who are participants in the Arlington County Housing Grants and Section 8 Housing Choice Vouchers programs; provided, however, that the Declarant shall not be required to give preference to such participants over other qualified Income-Restricted Unit households. 5. Leases. Declarant covenants, declares and agrees that all leases for the Income- Restricted Units entered into by Declarant shall provide for a minimum term of one (1) year. Declarant agrees to provide residents of all Income-Restricted Units full access to all amenities provided to other residents of the Property, if any, subject to the rules, regulations and conditions governing the use of these facilities for all Tenants as reasonably established by the Declarant. Declarant also agrees to comply with all of the guidelines listed in Section 3-23 of the HUD Occupancy Handbook to ensure that Tenants residing in Income-Restricted Units have a household size appropriate to the size of the unit being leased. 6. Qualification. Declarant covenants, declares and agrees that at the time of the initial occupancy of an Income-Restricted Unit by a qualified Tenant, the Declarant shall have establish that each 2 Page

5 household that leases an Income-Restricted Unit has an income that qualifies it for occupancy of such Income-Restricted Unit as set forth in this Declaration. Annually thereafter, the Declarant shall obtain from each household that leases an Income-Restricted Unit a signed Income Certification for Income Restricted Units Form (a form of which may be obtained from the County Staff) establishing the continued eligibility of such household, based on then current annual income, to occupy the Income-Restricted Unit under the terms of this Declaration, together with a signed Annual Rental Occupancy Affidavit (a form of which may be obtained from the County Staff) certifying that such household continues to occupy the Income- Restricted Unit. Any lease entered into by Declarant for an Income-Restricted Unit shall include a lease provision that states that a Tenant's failure to provide income information upon recertification will constitute a default with the lease and that tenancy may be terminated for such default. Further, such default on the part of the Tenant may require that the Declarant lease to another Tenant who is in compliance with the income standards for that particular Income-Restricted Unit or a similar one. If the annual income of a household residing in an Income-Restricted Unit increases above the qualifying income level, upon lease renewal that household would be considered over-income, and that household would no longer qualify to occupy an Income-Restricted Unit. Such household may nevertheless be permitted by the Declarant to remain in residence in the unit at the then prevailing rent level prescribed in the AHIF Loan Agreement. In the event that a previously qualified Tenant is being evicted or removed for a default involving non-compliance with the occupancy requirements/income restrictions, the Declarant will continue to be considered in compliance with this Declaration as long as the Declarant is pursuing possession of the Income-Restricted Unit occupied by such Tenant through all available legal means. 7. Reporting. During the Affordability Compliance Period, on or before the sixtieth (60 th ) day after the close of the Declarant s fiscal year or such other date as may be requested by the County Staff, the Declarant shall provide to the Housing Development Coordinator a report in a form required by the County Staff, listing the name of each household member occupying an Income-Restricted Unit, the qualifying income level of the household occupying such Income-Restricted Unit and the rental amount then being charged by Declarant for such Income-Restricted Unit. Further, the report will contain the recertification date, unit number and any other information that the County Staff deems reasonably necessary. In addition, at any time the Housing Development Coordinator or her designee may review or request copies of the Tenant s file, or review or request copies of the following documents, with respect to any Income-Restricted Unit: a. a copy of the Tenant's rental application; b. a copy of the executed rental agreement (lease); c. the Rental Income-Restricted Unit Income Certification Form (a form of which may be obtained from the County Staff), with supporting documentation; d. a copy of any Annual Rental Occupancy Affidavit (a form of which may be obtained from the County Staff); and e. income verification. 8. Inspections. The covenants and restrictions set forth herein shall be enforceable by the County Board in all respects. To assure and enforce compliance with this Declaration, the County Board or its designee shall have the right during Declarant s normal business hours and following upon reasonable notice to Declarant, and subject to the rights of Tenants under their leases and under applicable law, to inspect the Property, all books and records related thereto including, but not limited to, rental applications, rent rolls, and all other relevant documents which pertain to rents paid, occupancy, and incomes of all Tenants of the Project. 9. Transfers. Except as expressly permitted below, the Declarant shall not make or create or suffer to be made or created, any Transfer, either voluntarily or by operation of law, without the prior written approval of the County Board. As used herein, the term Transfer means (i) any total or partial sale, lease, assignment, or other conveyance, or any trust or power, or any transfer in any other mode or form of any part of or interest in the Property, or any agreement to do any of the foregoing or (ii) any total 3 Page

6 or partial sale, assignment, or other conveyance, or any trust or power, or any transfer in any other mode or form, of or with respect to any ownership interest in the Declarant or any agreement to do any of the foregoing. Any Transfer made in contravention of this Declaration shall at the County Board s discretion be void, whether or not Declarant knew of or participated in such Transfer. The only Transfer permitted at any time without the prior written approval of the County Board is the rental of an Income-Restricted Unit by the Declarant in the ordinary course of business. 10. Non-Discrimination. a. The Declarant shall not, in the selection of residents, in the provision of services, or in any other manner, discriminate against any person on the grounds of Race, National Origin, Color, Marital Status, Sex, Religion, Age/Elderliness, Disability (physical or mental), Sexual Orientation, or Familial Status (being pregnant or having children under age 18), or discriminate in violation of any applicable law or regulation. The Declarant shall comply with all requirements imposed by Title VIII of the Civil Rights Act of 1968, and any related rules and regulations. b. The Declarant agrees not to discriminate against prospective Tenants on the basis that they receive or are eligible to receive housing assistance under any Federal, State, or local housing assistance program and not to discriminate against or deny occupancy to any Tenant or prospective Tenant by reason that the Tenant has a minor child or children who will be residing with them. c. The Declarant shall not discriminate in the selection of contractors or contract workers because of Race, National Origin, Color, Marital Status, Sex, Religion, Age, Disability, Sexual Orientation, or Familial Status, except where one of these characteristics is a bona fide occupational qualification reasonably necessary to the normal operation of the Contractor. d. The Declarant covenants and agrees to encourage the use of, and provide the opportunity for, Minority and Women Business Enterprises to provide goods or services to the Declarant. 11. Default; Enforcement. In the event that the Declarant defaults in the performance of any of the covenants or its obligations under this Declaration, the County Board may, at its option, pursue any one or more of the remedies provided by law or in equity, including but not limited to the right to apply to any court of competent jurisdiction within the Commonwealth of Virginia to enforce specific performance by the Declarant of its obligations hereunder or to obtain an injunction against any violations hereof, or to obtain any other such relief as may be appropriate. 12. Waiver; Forbearance. The County Board shall have the right to waive at its option any of the rights granted to it hereunder to enforce the terms hereof, provided that the County Board s election not to pursue any particular remedy in the event of a default hereunder shall not be construed to preclude or be a waiver of the County Board s right to pursue any of the other remedies with respect to the violation for which such remedy was pursued or with respect to any other violation prior or subsequent thereto. In addition, any forbearance by the County Board in exercising any of its rights hereunder shall not constitute a waiver or preclude the exercise of such rights. 13. Amendment. This declaration may be amended only by written agreement by and between the Declarant and the County Board. 14. Governing Law. This Declaration shall be governed by the laws of the Commonwealth of Virginia. 15. Severability. The invalidity of any clause, part, or provision of this Declaration shall not affect the validity of the remaining portions hereof. 4 P age

7 16. Survival. The obligations of Declarant as set forth herein shall survive the term of the County AHIF Loan and shall not be deemed to merge with or be terminated by the making of such County AHIF Loan. 17. Covenants Run with the Land. The covenants set forth herein shall be deemed covenants running with the land and shall be an encumbrance on the Property. Such covenants shall be binding upon the Declarant and its successors and assigns, including any successor in title to the Property. 18. Subordination to VHDA Deed of Trust; VHDA Foreclosure. Notwithstanding any other provisions of this Declaration to the contrary, in the event that there is a default under the Virginia Housing Development Authority s deed of trust as a lender on the Property that results in a foreclosure or deed in lieu of foreclosure on the Property, this Declaration shall immediately thereafter terminate. SIGNATURE ON THE FOLLOWING PAGE 5 P age

8 IN WITNESS WHEREOF, the Declarant has caused this declaration to be executed as of the date first above written. BORROWER Quebec 172 Associates L.P., a Virginia limited partnership By: Quebec 172 Associates, LLC, a Virginia limited liability company, General Partner By: Silverwood Associates, Inc., a Delaware corporation, its Sole Member COMMONWEALTH OF VIRGINIA, COUNTY OF Arlington, to wit: By: Mark Silverwood, President The foregoing was acknowledged before me this day of, 2013, by Mark Silverwood, President of Silverwood Associates, Inc., sole member of Quebec 172 Associates, LLC, a Virginia limited liability company, and for and on behalf of Quebec 172 Associates L.P. Notary Public My Commission Expires: My Registration ID No. 6 P age

9 Exhibit A PROPERTY DESCRIPTION All that certain property located in the County of Arlington, Commonwealth of Virginia, more particularly described as follows: All those certain pieces or parcels of land, together with the improvements thereon, situate, lying, and being in Arlington County, Virginia, being more particularly described as follows: PARCEL I: Tract One: Those lots or parcels of land more particularly described as Parcels B, C, D, and E, Reinsch and Jesse s addition to Alcova Heights, as the same is duly dedicated, platted and recorded in Deed Book 1091 at Page 228 of the land records of Arlington County, Virginia Tract Two: Beginning at a point in the southerly line of Columbia Pike (Route 244) said point being the northerly corner of Parcel B, Reinsch and Jesse s Addition to Alcova Heights, thence running with said line of Columbia Pike N 71 degrees E ft. to P.C. of a curve to the right; thence departing from said line of Columbia Pike and running ft along the arc of said curve which has a radius of ft. and a chord which bears S 64 degrees E ft. to the P.C.C. of another curve to the right, said point being in the westerly line of South Quincy Street; thence running with said line of South Quincy Street ft. along the arc of said curve which has a radius of ft and a chord which bears S. 1 degree E ft. to the P.R.C. of a curve to the left; thence continuing with said line of South Quincy Street ft. along the arc of said curve which has a radius of ft. and a chord which bears S 12 degrees W ft. to a point in the easterly line of Parcel C aforementioned Reinsch and Jesse s Addition to Alcova Heights; thence running with the Easterly line of Parcel C and B N 19 degrees W ft. to the point of beginning containing 6,039 sq. ft., more or less. AND BEING the same property acquired by Seller by Deed dated as of May 1, 1996, recorded in Deed Book 2804, at page 2170, among the land records of Arlington County, Virginia. PARCEL II: Parcels A, F, and G of Subdivision of Reinsch and Jesse s Addition to Alcova Heights as the same is duly dedicated, platted and recorded in Deed Book 1091, at page 228, among the land records of said County. RPC Numbers: , , , , , , and (End of Exhibit A ) 7 P age