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HomeMy WebLinkAboutED RA Downtown Arts Center Affordable HousingCITY OF SAN RAFAEL AGENDA ITEM NO.: 4 MEETING DATE: July 20, 2009 SAN RAFAEL REDEVELOPMENT AGENCY REPORT SUBJECT: A RESOLUTION OF THE SAN RAFAEL REDEVELOPMENT AGENCY AUTHORIZING EXECUTION OF THE FIRST MODIFICATION OF THE GRANT AGREEMENT WITH OWNTOWN ARTS CENTER TO PROVIDE $130,000 FOR THE REHABILITATION OF AFFORDABLE ING AT 1325-1337 FOURTH STREET SUBMITTED BY: APPROVED BY: Nancy Mackle, Economic Development Director Ken Nordhoff, City Manager RECOMMENDATION: Staff recommends that the Agency adopt the attached resolution authorizing the modification of a grant agreement with Artworks Downtown Inc. in the amount of $130,000 for the installation of fire sprinklers. BACKGROUND: Artworks Downtown Inc., a non-profit organization, operates the Downtown Art Center at 1325-1337 Fourth Street, the Gordons Opera House property. Seventeen residential units are located on the upper floor of the building. The Agency provided $340,000 to assist Downtown Arts in the acquisition of the building and the housing units in 1999. In exchange for the grant, Artworks agreed to restrict, for forty years, the rent of all seventeen units to rates which would be affordable to low income tenants. Low income tenants are defined as those earning 50% of the area median income, or currently up to $33,900 for a single person and $38,700 for a two person household. ANALYSIS: Artworks is required by the City to sprinkler the building for a total cost of about $300,000. Artworks requested a grant in the amount of $130,000 to fund the portion of the cost associated with providing fire sprinkler protection to the housing units on the upper floors. In exchange for the additional funds, Artworks will extend the current rental restrictions on all 17 units by an additional 15 years to July 1, 2054. Prior to approaching the Agency, Artworks requested funding assistance from other donors including the Marin Community Foundation. Unfortunately, these funding requests were not granted. Artworks is funding the remainder of the fire sprinkler work by refinancing the existing mortgage at a lower interest rate and obtaining a line of credit on the building. FOR CITY CLERK ONLY File No.: City Council Meeting: Disposition: Page 2 FISCAL IMPACT: The grant shall total $130,000 and would be charged to the housing fund. The grant modification (attached) addresses the total amount of funding that the Agency has provided consisting of the original $340,000 for building acquisition and the $130,000 for a portion of the sprinkler system. The Agency's funds will be used to reimburse Artworks for the sprinkler work, once City staff has verified the system installation and compliance with all grant requirements including insurance requirements. OPTIONS: Staff recommends the Agency authorize the $130,000 grant modification. The Agency could take the following actions: • Direct staff to negotiate changes to the grant modification to reflect the desires of the Agency members. • Reject the grant modification. Staff does not recommend this alternative because Artworks does not have the financial capacity to install the sprinkler system without additional Agency funding. ACTION REQUIRED: Adopt the attached resolution ATTACHMENTS: A: Grant Modification. RESOLUTION NO. A RESOLUTION OF THE SAN RAFAEL REDEVELOPMENT AGENCY AUTHORIZING EXECUTION OF THE FIRST MODIFICATION OF THE GRANT AGREEMENT WITH DOWNTOWN ARTS CENTER TO PROVIDE $130,000 FOR THE REHABILITATION OF AFFORDABLE HOUSING AT 1325-1337 FOURTH STREET Moved Bv: Member Seconded Bv: Member BE IT RESOLVED by the San Rafael Redevelopment Agency as follows: WHEREAS, among the central objectives of the California Community Redevelopment Law, Health and Safety Code Section 33000 et seq. (the "Redevelopment Law"), are the creation and rehabilitation of existing structures to provide long-term affordable housing opportunities for low and moderate income households; and WHEREAS, in order to serve these objectives of the Redevelopment Law, the San Rafael Redevelopment Agency (the "Agency") and Artworks Downtown, Inc., a California nonprofit public benefit corporation (the "Developer"),entered into a certain Grant Agreement dated as of June, 1999 (the "Grant Agreement"), wherein the Agency granted Developer Three Hundred Forty Thousand Dollars ($340,000)(the "Original Grant") to fund the acquisition and rehabilitation of the building known as the Gordon Opera House located at 1325-1337 Fourth Street in the City of San Rafael (the "Property") and within the area governed by the Redevelopment Plan for the Central San Rafael Redevelopment Project, in which are located seventeen (17) residential units affordable to low and lower income households (the "Development"), which will further the objectives of the housing policies of the Agency; and WHEREAS, the Agency desires to assist the Development by making an additional grant to the Developer in the amount of One Hundred Thirty Thousand Dollars ($130,000) (the "Additional Grant") to help fund the cost of installing fire sprinkles to increase the safety and security of residents of the Development; and WHEREAS, the Agency staff have prepared a First Modification of Grant Agreement ("Modification Agreement") between the Agency and the Developer setting forth the rights and obligations of the parties with respect to allocation of the Additional Grant and extending the term of the Grant Agreement by fifteen (15) additional years or a date no earlier than July 1, 2054. NOW, THEREFORE, BE IT RESOLVED that the Board hereby approves allocating One Hundred Thirty Thousand Dollars ($130,000) from the Agency's Low and Moderate Income Housing Fund to fund the Additional Grant to the Developer as a lawful expenditure of the Low and Moderate Income Housing Fund monies under the Redevelopment Law. 141\01\675264.1 BE IT FURTHER RESOLVED AND ORDERED that the Board hereby approves the Modification Grant Agreement and authorizes the Economic Development Director or her designee to execute the First Modification Grant Agreement on behalf of the Agency, substantially in the form submitted to the Agency Board in connection with consideration of this resolution disburse the Additional Grant pursuant thereto and take all necessary actions and execute agreements and other documents required to implement and administer the Additional and Original Grant. I, Esther C. Beirne, Secretary of the San Rafael Redevelopment Agency hereby certify that the foregoing resolution was duly and regularly introduced and adopted at regular meeting of the Agency on the sixth day of July, 2009, by the following vote, to wit: AYES: Members, NOES: Members, ABSENT: Members, ABSTAIN: Members, Esther C. Beirne, Agency Secretary 141\01\675264.1 FIRST MODIFICATION OF GRANT AGREEMENT This First Modification of the Grant Agreement (the "Modification Agreement") is made as of July 1, 2009 by and between the San Rafael Redevelopment Agency, a public body, corporate and politic (the "Agency") and Artworks Downtown Inc., a California nonprofit public benefit corporation (the "Developer"). RECITALS A. The Agency and the Developer entered into that certain Grant Agreement executed on April 19, 1999 (the "Grant Agreement"), pursuant to which the Agency granted the Developer Three Hundred Forty Thousand Dollars ($340,000) of Agency Low and Moderate Income Housing Fund (the "Grant") in connection with Developer's acquisition and rehabilitation of the property located at 1325-1337 Fourth Street, San Rafael, California, Marin County, State of California, that is described in the attached Exhibit A, incorporated herein by this reference, (the "Development"). B. A Memorandum of Grant Agreement was made as of April 19, 1999 and recorded against the Development in the Official Records of the County of Marin as Document No. 1999- 0058482 (the "Memorandum of Grant Agreement"). C. The Grant Agreement requires the Developer to operate the Development as multifamily housing and that all seventeen (17) of the units in the Development be rented to very -low income households with an Adjusted Income (as defined in the Grant Agreement) that does not exceed fifty percent (50%) of Median Income (as defined in the Grant Agreement) at affordable rents as defined in Section 3.10 of the Grant Agreement (the "Affordability Restrictions"). D. Under the Grant Agreement, the Developer has agreed to operate the Development pursuant to the Affordability Restrictions for a term of forty (40) years from the date of execution of the Grant Agreement or a date no earlier than April 19, 2039. E. To enhance the safety and security of the residents of the Development, the Developer desires to install fire sprinklers in the Development, the cost of which is estimated to be One Hundred Thirty -Thousand Dollars ($130,000). F. The Agency and the Developer desire to modify the Grant Agreement to reflect an increase in the Grant by a total of One Hundred Thirty Thousand Dollars ($130,000) of Agency Low and Moderate Income Housing Fund monies, for a total Agency Grant amount of Four Hundred Seventy Thousand Dollars ($470,000). G. The Agency desires and the Borrower has agreed to increase the term of the Affordability Restrictions by an additional fifteen (15) years to a date no earlier than July 1, 2054. 141\01\675003.2 ATTACHMENT A WITH REFERENCE TO THE FACTS RECITED ABOVE, in consideration of the mutual benefits accruing to the parties hereto and other valuable consideration, the receipt and sufficiency of which consideration are hereby acknowledged, the Agency and the Developer (referred to individually as the "Party" and collectively as the "Parties") agree as follows: 1. Amendment of Grant Agreement. The Grant Agreement is hereby amended as follows: a) Recital B. Recital B is hereby deleted in its entirety and replaced with the following: "Pursuant to Health and Safety Code Sections 33334.2, 33334.3 and 33334.6, the Agency is providing Four Hundred Seventy Thousand Dollars ($470,000) of financial assistance to the Developer from the Agency's Low and Moderate Income Housing Fund and is imposing occupancy and affordability restrictions on the Development." b) Agency Grant. Section 1.1(d) is hereby deleted in its entirety and replaced with the following: " (d) "Agency Grant" means the grant to be made by the Agency to the Developer pursuant to this Agreement in the maximum amount of Four Hundred Seventy Thousand Dollars ($470,000), as further described in Section 2.1(a) below." c) Grant. Section 2.1 is hereby deleted in its entirety and replaced with the following: "The Agency shall grant to the Developer the amount of Four Hundred Seventy Thousand Dollars ($470,000), to be disbursed in the manner described in Section 2.3 below in exchange for the restrictions placed upon the Development by this Grant Agreement." d) Applicability. Section 3.1 is hereby deleted in its entirety and replaced with the following: "The Developer shall comply with this Article 3 throughout the Term. The Developer may not terminate the Grant Agreement by tendering repayment of the $470,000 grant payment received by the Developer from the Agency." e) Termination. Section7.2 is hereby deleted in its entirety and replaced with the following: "Unless earlier terminated pursuant to Section 5. 1, the term of this Agreement (the "Term") shall commence as of the date of execution of this Agreement and shall terminate fifty-five (55) years from the date of this Agreement (the "Expiration Date"). Following the Expiration Date, neither Party shall have any further rights or obligations under the Agreement except as otherwise provided herein." 2 141\01\675003.2 f) Enforcement. A new Section7.16 is hereby added to the Agreement to read as follows: "7.16 Enforcement. Notwithstanding any other provision of law; all covenants and restrictions contained herein which implement Health and Safety Code Section 33334.3 and/or 33413(c)(3), or successor provisions, shall run with the land and shall be enforceable by the City, the Agency and any of the parties listed in Health and Safety Code Section 33334.3(b)(7), so long as such provision or successor provisions remains in effect." g) Database. A new Section7.17 is hereby added to the Agreement to read as follows: "7.17 Database. Developer hereby acknowledges and agrees that Health and Safety Code Section 33418(c) requires that the Property be listed in a database that shall be made available to the public on the internet and which will include the street address, assessor's parcel number, and other information about the Property." 2. Attorney's Fees Enforcement. If any attorney is engaged by any party hereto to enforce or defend any provision of this Modification Agreement, the prevailing party or parties shall be entitled to costs and reasonable attorney's fees. 3. Effective Date. This Modification Agreement and amendments and deletions described in this Modification Agreement shall be effective as of the date first set forth above. 4. Full Force and Effect. Except as set forth in this Modification Agreement, the Grant Agreement remains unmodified and is in full force and effect. 5. Successors and Assigns. This Modification Agreement shall be binding on and inure to the benefit of the legal representatives, heirs, successors and assigns of the parties. 6. Invalidity. Any provision of this Modification Agreement which is determined by a court to be invalid or unenforceable shall be deemed severed here from, and the remaining provisions shall remain in full force and effect as if the invalid or unenforceable provision had not been a part hereof. 7. Headings. The headings used in this Modification Agreement are for convenience only and shall be disregarded in interpreting the substantive provisions of this Modification Agreement. 8. California Law. This Modification Agreement shall be governed by and construed in accordance with the laws of the State of California. 3 141\01\675003.2 9. Counterparts. This Modification Agreement may be signed by the different parties hereto in counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same agreement. above. BY SIGNING BELOW, the Parties agree to this Agreement as of the date first written AGENCY: SAN RAFAEL REDEVELOPMENT AGENCY, a public body, corporate and politic 51 Its: DEVELOPER: ARTWORKS DOWNTOWN, INC., a California nonprofit public benefit corporation By: r Its: President A' — Its: v v 4 141\01\675003.2