ARLINGTON COUNTY, VIRGINIA. County Board Agenda Item Meeting of July 16, 2016

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1 ARLINGTON COUNTY, VIRGINIA County Board Agenda Item Meeting of July 16, 2016 DATE: July 8, 2016 SUBJECT: Deed of Partial Release of commercial office condominium of Arlington Partnership for Affordable Housing ( APAH ) from the County s Affordable Housing Investment Partnership ( AHIF ) Deed of Trust and Deed of Declaration of Restrictive Covenants ( Declaration of Covenants ) for The Springs apartments, located at 555 N. Thomas St. C. M. RECOMMENDATION: 1. Approve the attached Deed of Partial Release, releasing APAH s commercial office condominium from the County s AHIF Deed of Trust and Declaration of Covenants on The Springs apartments, subject to approval as to final form by the County Attorney. 2. Authorize and direct the County Manager and the trustees for the County Board to execute the attached Deed of Partial Release, subject to approval as to final form by the County Attorney. ISSUES: This is a request to approve and authorize the County Manager to execute the attached Deed of Partial Release, releasing APAH s commercial office condominium from the County s AHIF Deed of Trust and Declaration of Covenants for The Springs apartments. There are no known issues at this time. SUMMARY: APAH is nearing a fall construction completion on The Springs, its 104-unit mixed-income project, which consists of 98 committed affordable units ( CAFs ) affordable to households earning up to 60% of the area median income (AMI) and six market units, located at 555 N. Thomas Street. APAH s new office headquarters will be located on the ground floor of the building. As anticipated in previous County Board reports on the project, APAH is forming a condominium structure for its ground floor offices and is requesting that the County release the commercial office condominium from the AHIF Deed of Trust and Declaration of Covenants. BACKGROUND: On January 25, 2014, the County Board approved Site Plan #430 and an AHIF loan for $7,827,700 to APAH, or its County-approved affiliate, to assist in the acquisition of land and construction of The Springs apartments. The Springs development project included County Manager: ##### County Attorney: ***** 50. Staff: Sarah Pizzo, Yoomie Ahn, Housing Division of CPHD

2 the demolition of APAH s 27-unit Carlyn Springs Apartments and the construction of a new five-story building with an underground garage and APAH s ground floor office headquarters. The Springs will contain 98 committed affordable units (CAFs) within a 104-unit mixed-income project. At its January 24, 2015 meeting, the County Board approved the AHIF loan documents for The Springs. This allowed APAH to close on its AHIF loan in conjunction with its tax credit equity and senior loan financing and to begin construction in February of APAH expects to complete construction and begin lease-up in fall DISCUSSION: This is a follow-up to the County Board actions taken at the January 25, 2014 and January 24, 2015 meetings. The January 2015 board report and the AHIF loan documents contained language related to the anticipated release of the commercial office condominium. The following is an excerpt from page 5 of the January 2015 County Board report: Post-Construction Following construction completion, APAH will create two condominium regimes for the property: a residential condominium for the 104 units and a commercial condominium for APAH s office headquarters. At that time, APAH will request that the County Board approve amendments to the AHIF loan documents in order to release the commercial condominium from the lien of the AHIF deed of trust. At this time, APAH is prepared to create the condominiums and is requesting that the County sign the attached Deed of Partial Release to release the commercial office condominium from the lien and encumbrance of the County s AHIF Deed of Trust and the Declaration of Covenants. As described in the Deed of Partial Release, this release will not affect the lien of the County s AHIF Deed of Trust or the encumbrance of the Declaration of Covenants on the residential condominium and the land. The AHIF Deed of Trust and the Declaration of Covenants will remain in full force and effect on the residential condominium. These documents will continue to ensure the security of the County s $7.8 million AHIF loan and the encumbrance of the 60- year affordability period on the 98 CAFs at The Springs. The County Manager recommends the County Board approve the attached Deed of Partial Release and authorizes the County Manager and the County trustees to sign. FISCAL IMPACT: There is no fiscal impact. The County Board approved the $7,827,700 in AHIF funds for the loan at its January 25, 2014 meeting and up to $160,000 in AHIF funds for the Tenant Assistance Fund at its July 19, 2014 meeting

3 Prepared by and return to: Benjamin J. Rubin, Esq. Gallagher Evelius & Jones LLP 218 N Charles Street, Suite 400 Baltimore, MD RPC No: DEED OF PARTIAL RELEASE This Deed of Partial Release ( Release ) is made and entered into this day of, 2016, by VIRGINIA HOUSING DEVELOPMENT AUTHORITY, a political subdivision of the Commonwealth of Virginia, (also called the Authority ); PAUL M. BRENNAN and FREDERICK W. BRYANT, TRUSTEES, either of whom may act, Grantor (also called Virginia Housing Trustees ); BANK OF AMERICA, N.A., a national banking association, (also called BOA ); PRLAP, Inc., a Virginia corporation (also called BOA Trustee ); THE COUNTY BOARD OF ARLINGTON COUNTY, VIRGINIA, a body corporate and politic of the Commonwealth of Virginia, (also called the County ); JULIE MASSIE and SUSAN STOUT, TRUSTEES, either of whom may act, Grantor (also called Arlington Trustees ); and ARLINGTON PARTNERSHIP FOR AFFORDABLE HOUSING, INC., a Virginia nonprofit corporation (also called APAH, and collectively with the Authority, Virginia Housing Trustees, BOA, BOA Trustee, County and Arlington Trustees, the Grantors ). * * RECITALS * * WHEREAS, THE SPRINGS APARTMENTS LIMITED PARTNERSHIP, a Virginia limited partnership (the Owner ) was the sole owner and proprietor of a certain parcel or tract of real property, situate and located in Arlington County, Virginia, identified as Arlington County Real Property Code # and known as Parcel Four-B (4-B) Mrs. Rose Brooks Subdivision (the Property ), by virtue of that certain deed dated #558382v5

4 January 30, 2015, and recorded in Deed Book 4819 at page 1304, among the land records of Arlington County, Virginia, (the Land Records ); and WHEREAS, pursuant to that certain Declaration of The Springs Condominium dated and recorded in Deed Book at page (the Declaration ) the Owner has caused the Property to be subjected to a condominium regime (the Condominium ) having two units, the Residential Unit and the Commercial Unit, as defined in the Declaration; and WHEREAS, the Condominium s Commercial Unit is referred to herein as the Commercial Unit. WHEREAS, by virtue of that certain Virginia Housing Development Authority Deed of Trust dated January 30, 2015, and recorded in Deed Book 4819 at page 1318 among the Land Records, (hereinafter referred to as the Authority Deed of Trust ), the Property was conveyed in trust to the Virginia Housing Trustees, to secure an indebtedness to the Authority; and WHEREAS, by virtue of that certain Regulatory Agreement dated January 30, 2015, and recorded in Deed Book 4819 at page 1334 among the Land Records (hereinafter referred to as the Authority Declaration ), the Property was subjected to certain regulatory restrictions; and WHEREAS, by virtue of (i) that certain Credit Line Deed of Trust, Assignment, Security Agreement and Fixture Filing dated January 30, 2015, and recorded in Deed Book 4819 at page 1350 among the Land Records, and (ii) that certain Credit Line Deed of Trust, Assignment, Security Agreement and Fixture Filing dated January 30, 2015 and recorded in Deed Book 4819, Folio 1417 among the Land Records (collectively referred #558382v5

5 to as the BOA Deeds of Trust ), the Property was conveyed in trust to the BOA Trustee, to secure an indebtedness to BOA; and WHEREAS, by virtue of that certain Affordable Housing Land Use Restriction Agreement dated January 30, 2015, and recorded in Deed Book 4819 at page 1451 among the Land Records (hereinafter referred to as the BOA Declaration ), the Property was subjected to certain regulatory restrictions; and WHEREAS, by virtue of that certain Purchase Money Deed of Trust, Assignment of Rents and Leases and Security Agreement dated January 30, 2015, and recorded in Deed Book 4819 at page 1373 among the Land Records (hereinafter referred to as the County Deed of Trust ), the Property was conveyed in trust to the Arlington Trustees, to secure an indebtedness to the County; and WHEREAS, by virtue of that certain Deed of Declaration of Restrictive Covenants dated January 30, 2015, and recorded in Deed Book 4819 at page 1407 among the Land Records (hereinafter referred to as the County Declaration ), the Property was subjected to certain regulatory restrictions; and WHEREAS, by virtue of that certain Right of First Refusal Agreement dated February 28, 2014, and recorded in Deed Book 4819 at page 1483 among the Land Records (hereinafter referred to as the ROFR ), the Property was subjected to a right of first refusal; and WHEREAS, Grantors desire to release the Commercial Unit from the encumbrances described above. #558382v5

6 PARTIAL RELEASE BY THE AUTHORITY WITNESSETH that in consideration of the sum of Ten Dollars ($10.00), cash in hand paid, and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Virginia Housing Trustees, as authorized to act by the Authority, and the Authority, do hereby release the Commercial Unit from the lien and encumbrance of the Authority Deed of Trust and the Authority Declaration. It is expressly understood that the release of the Commercial Unit shall not affect in any way the lien of the Authority Deed of Trust or the encumbrance of the Authority Declaration upon any other properties subjected to the Authority Deed of Trust and the Authority Declaration, and the Authority Deed of Trust and the Authority Declaration shall remain in full force and effect as to the land described therein and not released herein. PARTIAL RELEASE BY BOA WITNESSETH that in consideration of the sum of Ten Dollars ($10.00), cash in hand paid, and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the BOA Trustee, as authorized to act by BOA, and BOA, do hereby release the Commercial Unit from the lien and encumbrance of the BOA Deeds of Trust and the BOA Declaration. It is expressly understood that the release of the Commercial Unit shall not affect in any way the lien of the BOA Deeds of Trust or the encumbrance of the BOA Declaration upon any other properties subjected to the BOA Deeds of Trust and the BOA Declaration, and the BOA Deeds of Trust and the BOA Declaration shall remain in full force and effect as to the land described therein and not released herein. #558382v5

7 PARTIAL RELEASE BY THE COUNTY WITNESSETH that in consideration of the sum of Ten Dollars ($10.00), cash in hand paid, and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Arlington Trustees, as authorized to act by the County, and the County, do hereby release the Commercial Unit from the lien and encumbrance of the County Deed of Trust and the County Declaration. It is expressly understood that the release of the Commercial Unit shall not affect in any way the lien of the County Deed of Trust or the encumbrance of the County Declaration upon any other properties subjected to the County Deed of Trust and the County Declaration, and the County Deed of Trust and the County Declaration shall remain in full force and effect as to the land described therein and not released herein. PARTIAL RELEASE BY APAH WITNESSETH that in consideration of the sum of Ten Dollars ($10.00), cash in hand paid, and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, APAH does hereby release the Commercial Unit from the ROFR. It is expressly understood that the release of the Commercial Unit shall not affect in any way the encumbrance of the ROFR upon any other properties subjected to the ROFR, and the ROFR shall remain in full force and effect as to the land described therein and not released herein. FREE CONSENT This Release is made with the free consent and in accordance with the desire of the undersigned Grantors as holders of security interests in the Property and/or beneficiaries of certain encumbrances affecting the Property, and is in accordance with #558382v5

8 the statutes of Virginia and the ordinances in force in Arlington County, Virginia. This Release may be executed in counterparts, each of which shall be deemed an original but which together shall constitute one and the same instrument. This Release shall be construed, interpreted and applied according to the law of the Commonwealth of Virginia. The recitals are hereby incorporated into this Release. [SIGNATURES APPEAR ON THE FOLLOWING PAGES] #558382v5

9 THE COUNTY BOARD OF ARLINGTON COUNTY, VIRGINIA By: Name: Title: COUNTY OF : to-wit The foregoing instrument was acknowledged before me this day of, 2016, by the of ARLINGTON COUNTY, VIRGINIA. My commission expires: Notary Registration #: [Signature Page County] #558382

10 JULIE MASSIE, TRUSTEE COUNTY OF : to-wit The foregoing instrument was acknowledged before me this day of, 2016, by JULIE MASSIE. My Commission Expires: Virginia Notary Registration #: SUSAN STOUT, TRUSTEE COUNTY OF : to-wit The foregoing instrument was acknowledged before me this day of, 2016, by SUSAN STOUT. My Commission Expires: Virginia Notary Registration #: [Signature Page Arlington Trustees] #558382

11 Approved as to form: County Attorney [Signature Page County Attorney] #558382

12 PAUL M. BRENNAN, TRUSTEE COUNTY OF : to-wit The foregoing instrument was acknowledged before me this day of, 2016, by PAUL M. BRENNAN. My Commission Expires: Virginia Notary Registration #: FREDERICK W. BRYANT, TRUSTEE COUNTY OF : to-wit The foregoing instrument was acknowledged before me this day of, 2016, by FREDERICK W. BRYANT. My Commission Expires: Virginia Notary Registration #: [Signature Page Virginia Housing Trustees] #558382

13 VIRGINIA HOUSING DEVELOPMENT AUTHORITY, a political subdivision of the Commonwealth of Virginia By: Name: Title: COUNTY OF : to-wit The foregoing instrument was acknowledged before me this day of, 2016, by, of VIRGINIA HOUSING DEVELOPMENT AUTHORITY. My Commission Expires: Virginia Notary Registration #: #558382

14 # [Signature Page Authority]

15 BANK OF AMERICA, N.A., a national banking association By: Name: Title: COUNTY OF : to-wit The foregoing instrument was acknowledged before me this day of, 2016, by the of BANK OF AMERICA, N.A.. My commission expires: Notary Registration #: [Signature Page BOA] #558382

16 PRLAP, Inc., a Virginia corporation, Trustee COUNTY OF : to-wit By: Name: The foregoing instrument was acknowledged before me this day of, 2016, by the of PRLAP, Inc.. My commission expires: Notary Registration #: [Signature Page BOA Trustee] #558382

17 Arlington Partnership for Affordable Housing, Inc., a Virginia nonprofit corporation By: Nina Janopaul President COUNTY OF : to-wit The foregoing instrument was acknowledged before me this day of, 2016, by Nina Janopaul, the President of Arlington Partnership for Affordable Housing, Inc. My commission expires: Notary Registration #: [Signature Page APAH] #558382