REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF THE COUNTY OF SAN BERNARDINO
AND RECORD OF ACTION
March 10, 2020
FROM
GARY HALLEN, Director, Community Development and Housing
SUBJECT
Title v
Assignment, Assumption and Consent Agreement Relating to the Sale of Village Green Apartment Project Located in the City of San Bernardino
End
RECOMMENDATION(S)
Recommendation
1. Consent to the sale of Village Green Apartments from PD Village Green L.P. to Strategic Realty Holdings, LLC.
2. Approve the Assignment, Assumption and Consent Agreement between PD Village Green, L.P. and Village Green Chestnut, L.P.
3. Approve the Accessibility Agreement between Village Green Chestnut L.P. and the County of San Bernardino.
4. Authorize the County of San Bernardino Chief Executive Officer, upon approval as to form by County Counsel, to make non-substantive changes to the existing documents, if needed, to conform to the transaction.
5. Direct the Community Development and Housing Agency Deputy Executive Officer or the Community Development and Housing Director to transmit all documents to the Clerk of the Board within 30 days of execution.
(Presenter: Gary Hallen, Director, 387-4411)
Body
COUNTY AND CHIEF EXECUTIVE OFFICER GOALS & OBJECTIVES
Promote the Countywide Vision.
Ensure Development of a Well-Planned, Balanced, and Sustainable County.
FINANCIAL IMPACT
Approval of this item will not impact Discretionary General Funding (Net County Cost). All costs associated with the sale and transfer of Village Green Apartments (Project) will be borne by Village Green Chestnut, L.P. The County will continue to monitor the project for compliance with the Regulatory Agreement on an annual basis until 2031 and will receive an annual monitoring fee of approximately $13,235.
BACKGROUND INFORMATION
This item will allow for the sale and transfer of the Village Green Apartments (“Project”) from PD Village Green, L.P. (“Seller”) to Strategic Realty Holdings LLC (“Buyer”). The Regulatory Agreement governing the Project will remain unchanged and all terms and conditions of the Regulatory Agreement will be transferred to Village Green Chestnut, L.P. (“Transferee”) which is the parent company of the Buyer. The Transferee will execute an Assignment, Assumption and Consent Agreement (“Agreement”), assuming all obligations under the Regulatory Agreement.
Village Green Apartments is a 184-unit complex that was financed with $5,294,000 in County of San Bernardino Multifamily Housing Revenue Bonds from 1998 Series A bonds (“Bonds”) of which 74 units are designated as affordable to serve households with income not exceeding sixty percent (60%) of the Area Median Income (AMI). Under the terms and conditions of the original Regulatory Agreement dated May 1, 1998, which was later amended on August 15, 2000, the sale and/or transfer of the Project requires the Board to execute and deliver consent prior to the sale or transfer.
As part of the due diligence and as a condition of concurrence of the sale, the County required the Seller to obtain a Certified Access Specialist Property inspection report (“CASp Report”) to ensure the Project met all Section 504, ADA and accessibility requirements. In the CASp Report dated November 23, 2019, accessibility deficiencies were identified. The County is requiring the Buyer to remediate all deficiencies after the closing of the sale to not delay the transaction since the Seller would not have adequate time to complete the repairs due to the timing of the sale. The Transferee has agreed to enter into an Accessibility Agreement with the County of San Bernardino that will address and remediate all deficiencies within the prescribed detailed scope of work and work schedule (not to exceed 18 months), as defined in the Accessibility Agreement. In addition, to ensure the work is completed in a timely manner and to the satisfaction of the County, a Completion Guaranty is required. The County will monitor and track the progress and completion of the work via quarterly progress reports.
On November 1, 2011, when the original project owner redeemed the Bonds and transferred the project to the current owner, the Board approved a Second Amendment to the Regulatory Agreement which clarified the term of the affordability period referred to as the Qualified Project Period (“QPP”) and amount fees to be paid to the County for monitoring fees (Item 10). The QPP runs concurrently with the Section 8 Housing Assistance Payments Contract (“HAP”). The HAP is a renewable contract with a five-year period that began on April 1, 2018 and expires on March 31, 2023. The HAP may be extended by the Department of Housing and Urban Development (HUD), if extended, the QPP will also extend. In addition to the Regulatory Agreement relating to the Bonds, there is an additional Regulatory Agreement governing rent restrictions as imposed under the Low-Income Housing Tax Credit (“LIHTC”) tax credit program; this Regulatory Agreement is scheduled to expire in 2031.
The Transferee, parent company of the Buyer, will assume all responsibilities related to all the covenants and restrictions levied against the Project. The responsibilities include but are not limited to the extension of the QPP, number of restricted units and the applicable rent limits, monitoring fees, etc. The County required the Buyer to successfully demonstrate its fiscal and operational capacity to manage the Project during the due diligence process given the complexity of the financing and management needs of the Project.
PROCUREMENT
N/A
REVIEW BY OTHERS
This item has been reviewed by County Counsel (Suzanne Bryant, Deputy County Counsel, 387-5455) on February 11, 2020; Finance (Kathleen Gonzalez, Administrative Analyst, 387-5412) on February 20, 2020; and County Finance and Administration (Robert Saldana, Deputy Executive Officer, 387-5423) on February 25, 2020.