HomeMy WebLinkAboutCC Resolution 14881 (Fourth Amendment to the Amended and Restated Ground Lease at 855 C Street)1
RESOLUTION NO.14881
RESOLUTION OF THE SAN RAFAEL CITY COUNCIL APPROVING AND
AUTHORIZING THE CITY MANAGER TO EXECUTE A FOURTH AMENDMENT TO THE
AMENDED AND RESTATED GROUND LEASE AND A PROMISSORY NOTE IN AN
AMOUNT NOT TO EXCEED $650,000 WITH CENTERTOWN II, LLC FOR THE REAL
PROPERTY LOCATED AT 855 C STREET IN THE CITY OF SAN RAFAEL
WHEREAS, the City of San Rafael, as successor housing agency to the former San Rafael
Redevelopment Agency (“SRRA”), is the fee owner of that certain approximately 0.98-acre lot at
855 C Street in downtown San Rafael (“Centertown Land”) on which the Centertown Apartments
are located; and
WHEREAS, in 1989 Centertown Associates, Ltd. (“Centertown Associates”) a limited
partnership managed by BRIDGE Housing and EAH Housing (“BRIDGE/EAH”), entered into a
75-year ground lease with City’s predecessor-in-interest, SRRA, which provided among other
things for redevelopment of the Centertown Land, including an existing, partially completed
foundation structure that was part of an earlier failed condominium development, as an affordable
rental apartment project; and
WHEREAS, as contemplated by the ground lease, Centertown Associates completed
development of the Centertown apartments (“Centertown Apartments”) which include
approximately 85,469 gross square feet of building area arranged around a central courtyard, with
60 affordable family apartments– 17 one-bedroom units, 27 two-bedroom units, 15 three-bedroom
units, and an onsite two-bedroom property manager’s unit; and
WHEREAS, all of the residents of Centertown Apartments are lower income households,
with an average household income equal to approximately 32% of the Marin County Areawide
Median Income (AMI); and
WHEREAS, the ground lease originally recorded on November 30, 1989, has been
subsequently amended three times given evolving financial conditions over time; and
WHEREAS, Centertown Apartments has experienced numerous construction related
issues, including significant problems related to water intrusion, aging building systems and
deferred maintenance with a total estimated rehabilitation cost of approximately $10 million, which
includes an approximately 10 percent hard cost contingency that is typical for rehabilitation of
older properties; and
WHEREAS, BRIDGE/EAH desire to fund the needed rehabilitation work by re-syndicating
and refinancing the Centertown Apartments development using tax exempt bond proceeds and
tax credit re-syndication and in connection therewith BRIDGE/EAH desire to extend the term of
the ground lease and modify the existing City loans to extend their term and reduce their interest
rates; and
WHEREAS, entering into the fourth amendment to the amended and restated ground
lease and promissory note will facilitate BRIDGE/EAH’s efforts to qualify for allocations of tax-
exempt bond proceeds from the California Debt Limit Allocation Committee (“CDLAC”) and low-
income housing tax credits from the State Tax Credit Allocation Committee (“TCAC”); and
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WHEREAS, the fourth amendment to the amended and restated ground lease also
recasts any outstanding ground lease payments as a new loan provided by the City of San Rafael
as evidenced by a promissory note in the form attached to the fourth amendment; and
WHEREAS, City Council’s approval of the fourth amendment and promissory note, and
the parties execution thereof, should be conditioned upon Centertown Associates’ receipt of an
award of tax exempt bond proceeds from CDLAC;
NOW, THEREFORE, BE IT RESOLVED, that the City Council hereby approves and
authorizes the City Manager to execute a fourth amendment to the amended and restated ground
lease and a promissory note in an amount not to exceed $650,000 with Centertown II, LLC for
the real property located at 855 C Street in the City of San Rafael in the form attached to this
Resolution as Exhibit A, subject to final approval as to form by the City Attorney, with City’s
execution of such documents contingent upon Centertown’s receipt of tax exempt affordable
housing bond fund monies to fund the planned rehabilitation of the Centertown Apartments.
I, LINDSAY LARA, City Clerk of the City of San Rafael, hereby certify that the foregoing
resolution was duly and regularly introduced and adopted at a regular meeting of the City Council
held on the 21st day of December 2020, by the following vote to wit:
AYES: COUNCILMEMBERS: Bushey, Kertz, Llorens Gulati & Mayor Kate
NOES: COUNCILMEMBERS: None
ABSENT: COUNCILMEMBERS: None
__________
LINDSAY LARA, City Clerk
EXHIBIT A: FOURTH AMENDMENT TO THE AMENDED AND RESTATED LEASE
EXHIBIT 1 TO EXHIBIT A: PROMISSORY NOTE
FOURTH AMENDMENT TO AMENDED AND RESTATED GROUND LEASE
(855 C Street, San Rafael, California)
THIS FOURTH AMENDMENT TO AMENDED AND RESTATED GROUND LEASE
(the "Fourth Amendment"), is entered into as of June 2, 2021 ("Effective Date"), by and
between the City of San Rafael, as successor -in -interest to the former Redevelopment Agency of
the City of San Rafael (the "Landlord" or "City"), and Centertown Associates, Ltd., a California
limited partnership (the "Lessee"), with reference to the following facts, purposes and intentions.
RECITALS
A. Landlord and Lessee (collectively, the "Parties") entered into that certain ground
lease dated November 6, 1989, as amended by that certain First Amended and Restated Ground
Lease dated August 20, 1990, as amended by that certain Second Amendment to the First
Amended and Restated Ground Lease dated May 6, 1991, and that certain Third Amendment to
First Amended and Restated Ground Lease dated April 1, 1993 (as amended, the "Agreement").
Capitalized terms used in this Fourth Amendment, but not defined, shall have the meaning set
forth in the Agreement.
B. In accordance with Section 10.3 of the Agreement, the Parties desire to enter into
this Fourth Amendment to: (i) modify the rent payment to be One Dollar ($1.00) per year; (ii)
add a Five Thousand Dollar ($5,000) per year annual City monitoring fee; and (iii) make other
conforming amendments to the Agreement as set forth herein.
C. Concurrently with the execution of this Fourth Amendment, the Lessee and the
City are entering into a promissory note (the "Note") in the approximate amount of Six Hundred
Thirty -One Thousand Dollars ($631,000).
NOW, THEREFORE, for good and valuable consideration, the adequacy and receipt of
which is hereby acknowledged, the Parties agree as follows:
AGREEMENTS:
ARTICLE 1.
AMENDMENTS TO AGREEMENT
Section 1.1 Amendment to Section 2.3. Section 2.3 of the Agreement is hereby
deleted, in its entirety, and amended and restated as follows:
"Section 2.3. Rental Provisions and Monitoring Fee.
(a) Lessee agrees to pay the Lessor as rent for the Land as follows:
Commencing on the Effective Date, the Lessee shall pay, on an annual basis, rent in the
amount of One Dollar ($1.00) per year or fraction thereof.
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(b) In connection with the requirements imposed by this Lease and to ensure
compliance, Lessee agrees to pay the Lessor on January 1 of each year a Five Thousand
Dollar ($5,000) annual monitoring fee.
(c) Rent and all other sums payable by Lessee to Lessor under this Lease shall
be paid in lawful currency of the United States of America at Lessor's address for notices
as set forth below, or to such other person or at such other place as Lessor may from time
to time designate by notice in writing to Lessee."
ARTICLE 2.
MISCELLANEOUS
Section 2.1 No Other Changes to the Agreement; Ratification. Except as expressly
modified by this Fourth Amendment, all other provisions of the Agreement remain unmodified
and continue in full force and effect. The Agreement, as amended by this Fourth Amendment, is
hereby ratified and confirmed by the Parties in all respects. The execution and delivery of this
Fourth Amendment shall not operate as a waiver of or, except as expressly set forth herein, an
amendment of any right, power or remedy of either party under the Agreement. This Fourth
Amendment, together with the Note and the Agreement, sets forth the entire understanding of the
parties in connection with the subject matter hereof.
Section 2.2 Conflicts with the Agreement. In the event of any conflict or
inconsistency between the terms of this Fourth Amendment and the terms of the Agreement, the
terms of this Fourth Amendment shall prevail.
Section 2.3 Counterparts; Multiple Originals. This Fourth Amendment may be
executed in multiple originals, each of which is deemed to be an original, and may be executed
in counterparts. This Fourth Amendment shall become effective when the Parties have duly
executed and delivered signature pages of this Fourth Amendment to each other. Delivery of this
Fourth Amendment shall be effectuated by electronic communication (including by PDF sent by
electronic mail, facsimile or similar means of electronic communication). Any signatures
(including electronic signatures) delivered by electronic communication shall have the same
legal effect as physically delivered original signatures.
Remainder of Page Left Intentionally Blank
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IN WITNESS WHEREOF, this Fourth Amendment has been entered into by the Parties
as of the date first written above.
ATTEST:
S • A/i.Z/L�
-Fplr Lindsay Lara, City Clerk
APPROVED AS TO FORM:
VC, r
Robert Epstein, City Att mey
LANDLORD:
CITY OF SAN RAFAEL, a municipal corporation
By:
Name: Ji chutz
Title: Citv Manaaer
LESSEE:
CENTERTOWN ASSOCIATES, LTD., a
California limited partnership
By: Centertown, Inc., a California non-profit
public benefit corporation, its general
partner
By:
Name: Susan Joh on
Title: First Vice President and CFO
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PROMISSORY NOTE
(Centertown)
$631,000
San Rafael, California
June 2, 2021
FOR VALUE RECEIVED, Centertown Associates, Ltd., a California limited partnership
("Borrower"), promises to pay to the order of the City of San Rafael, a municipal corporation
("Lender"), the principal sum of Six Hundred Thirty -One Thousand Dollars ($631,000).
1. Borrower's Obligation. Loan. This promissory note ("Note") evidences
Borrower's obligation to pay the Lender the principal amount of [Six Hundred Thirty -One
Thousand Dollars ($631,000)] (the "Loan"), representing deferred payments (the "Deferred
Payments") owed by Borrower, as lessee, to Lender, as lessor, under the ground lease dated
November 6, 1989, as amended by that certain First Amended and Restated Ground Lease dated
August 20, 1990, as amended by that certain Second Amendment to the First Amended and
Restated Ground Lease dated May 6, 1991, and that certain Third Amendment to First Amended
and Restated Ground Lease dated April 1, 1993 (as amended, the "Aareement"). Concurrently
herewith, Lender, as lessor, and Borrower, as lessee, are entering into a Fourth Amendment to
Amended and Restated Ground Lease ("Fourth Amendment"). The funds from the Deferred
Payments were used to assist in the rehabilitation and operation of that certain low-income
housing development located at 855 C Street, San Rafael, California, currently improved with
approximately sixty (60) residential units and certain accessory uses.
(b) Unsecured. This Note is unsecured, and the Borrower has not provided
any collateral to the Lender for the Loan.
2. Interest. The outstanding principal balance of this Note will bear interest at a
fixed rate of three percent (3.00%) per annum.
3. No Assumption. This Note is not assumable by the successors and assigns of
Borrower without the prior written consent of the Lender.
4. Term and Repayment Requirements.
(a) Term. The term of this Note commences with the date of this Note and
expires on November 6, 2052 (the "Maturity Date").
(b) Repayment. The Loan will not amortize. The principal and interest
balance of the Loan is due and payable in full upon the earlier to occur of: (i) the date of any
Default, or (ii) the Maturity Date.
(c) Right to Prepay. Borrower may prepay the Loan at any time without
premium or penalty.
Terms of Payment.
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(a) Borrower shall make all payments due under this Note in currency of the
United States of America, which at the time of payment is lawful for the payment of public and
private debts.
(b) All payments on this Note are to be paid to the Lender at City of San
Rafael City Hall, 1400 Fifth Avenue, San Rafael, CA 94901, Attn: Finance Department, or to
such other place as the Lender may from time to time designate.
(c) All payments on this Note are without expense to the Lender.
(d) Notwithstanding any other provision of this Note, if, for any reason
whatsoever, the payment of any sums by Borrower pursuant to the terms of this Note would
result in the payment of interest that exceeds the amount that the Lender may legally charge
under the laws of the State of California, then the amount by which payments exceed the lawful
interest rate will automatically be deducted from the principal balance owing on this Note, so
that in no event is Borrower obligated under the terms of this Note to pay any interest that would
exceed the lawful rate.
6. Default.
(a) Any of the following constitutes an event of default under this Note (each,
a "Default"):
(i) Any failure to pay, in full, any payment required under this Note or
any amount due under Agreement, as further amended by the Fourth Amendment, within ten
(10) days of written notice that such payment is due; and
(ii) Failure of Borrower to duly perform, comply with, or observe any
of the conditions, terms, or covenants of this Note or the Agreement, as further amended by the
Fourth Amendment, and such failure or breach having continued uncured for thirty (30) days
after receipt of written notice thereof from the Lender to Borrower or, if the failure or default
cannot be cured within thirty (30) days, Borrower shall not be in default so long as Borrower is
diligently undertaking to cure such failure and such cure is commenced within thirty (30) days of
such failure.
(b) Upon the occurrence of a Default, the entire unpaid principal balance,
together with all interest thereon, and together with all other sums then payable under this Note
will at the option of the Lender become immediately due and payable without further demand.
(c) Lender's failure to exercise the remedy set forth in Subsection 6(b) above
or any other remedy provided by law upon the occurrence of one or more of the foregoing events
of Default does not constitute a waiver of the right to exercise any remedy at any subsequent
time in respect to the same or any other Default. The acceptance by Lender hereof of any
payment which is less than the total of all amounts due and payable at the time of such payment
does not constitute a waiver of the right to exercise any of the foregoing remedies or options at
that time or at any subsequent time, or nullify any prior exercise of any such remedy or option,
without the express consent of the Lender, except as and to the extent otherwise provided by law.
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7. Waivers.
(a) Borrower hereby waives diligence, presentment, protest and demand, and
notice of protest, notice of demand, and notice of dishonor of this Note. Borrower expressly
agrees that this Note or any payment hereunder may be extended from time to time, and that the
Lender may accept further security or release any security for this Note, all without in any way
affecting the liability of Borrower.
(b) Any extension of time for payment of this Note or any installment hereof
made by agreement by the Lender with any person now or hereafter liable for payment of this
Note shall not operate to release, discharge, modify, change or affect the original liability of
Borrower under this Note, either in whole or in part.
(c) The obligations of Borrower under this Note are absolute and Borrower
waives any and all rights to offset, deduct or withhold any payments or charges due under this
Note for any reason whatsoever.
Miscellaneous Provisions.
(a) All notices to the Lender or Borrower shall be sufficiently given if and
shall not be deemed given unless dispatched by registered or certified mail, postage prepaid,
return receipt requested, or delivered by express delivery service, return receipt requested, or
delivered personally, to the principal office of the parties as follows:
Lender:
City of San Rafael
1400 Fifth Avenue, Room 202
San Rafael, CA 94901
Attn: Jim Schultz, City Manager
jim.schultz@cityofsanrafael.org
with copy to:
City of San Rafael
1400 Fifth Avenue, Room 202
San Rafael, CA 94901
Attn: Robert Epstein, City Attorney
rob. epstein@cityofsanrafael.org
Borrower:
Centertown Associates, Ltd.
c/o BRIDGE Housing Corporation
600 California Suite 600
San Francisco, CA
Attention: Rebecca V. Hlebasko
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with copy to:
Goldfarb & Lipman LLP
1300 Clay Street, 11th Floor
Oakland, CA 94612
Attention: Erica Williams Orcharton
Such written notices, demands and communications may be sent in the same manner to
such other addresses as the affected party may from time to time designate by mail as provided
in this Section. Receipt shall be deemed to have occurred on the date shown on a written receipt
as the date of delivery or refusal of delivery (or attempted delivery if undeliverable).
(b) Borrower promises to pay all costs and expenses, including reasonable
attorney's fees, incurred by the Lender in the enforcement of the provisions of this Note,
regardless of whether suit is filed to seek enforcement.
(c) This Note may not be changed orally, but only by an agreement in writing
signed by the party against whom enforcement of any waiver, change, modification or discharge
is sought.
(d) This Note is governed by and construed in accordance with the laws of the
State of California.
(e) The times for the performance of any obligations hereunder are strictly
construed, time being of the essence.
(f) This Note contains the entire agreement between the Lender and Borrower
as to the Loan. This Note may not be modified except upon the written consent of the Lender
and Borrower.
[Signatures on following page]
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IN WITNESS WHEREOF, Borrower has caused this Note to be executed and delivered
on the date set forth above.
CENTERTOWN ASSOCIATES, LTD., a
California limited partnership
By: Centertown, Inc., a California non-profit
public benefit corporation, its general
partner
By:
Name: Susan Johns
L/
Title: First Vice President and CFO
S-1
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