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Home My WebLink AboutC10-257 Transfer Development Rights for Stratton Flats August 9, 2010 Eagle County, Colorado 500 Broadway Box 580 Eagle, Colorado 81621 Eagle County Housing and Development Authority 500 Broadway Box 580 Eagle, Colorado 81621 Re: Stratton Flats Ladies and Gentlemen: Meritage JFA Gypsum, LLC ( "Meritage "), Stratton Flats, LLC ( "Original Developer "), and Eagle County, Colorado ( "Eagle County ") previously entered into an "Agreement to Provide Deed Restricted Housing on Stratton Flats" dated as of January 15, 2008. Such agreement was modified by a "First Amendment to Agreement to Provide Deed Restricted Housing on Stratton Flats" dated as of February 28, 2008, and by a "Second Amendment to Agreement to Provide Deed Restricted Housing on Stratton Flats" dated as of October 14, 2008. Such agreement, as so modified, is referred to in this letter as the "County Agreement." Pursuant to the Second - Amendment referenced above, Eagle County assigned all its rights and obligations under the Agreement to Eagle County Housing and Development Authority ( "ECHA "), and Meritage ceased to be a party to the Agreement. Accordingly, the current parties to the County Agreement. are ECHA and Original Developer. Eagle County and ECHA are sometimes collectively referred to in this letter agreement as the "County." Pursuant to the County Agreement, Eagle County provided Original Developer with the sum of $4,500,000 (the "County Payment "), to be used in connection with the residential real estate development project located in the County that is commonly known as "Stratton Flats" (the "Project "). The current legal description of the Project is set forth on Exhibit A attached hereto. In exchange for the County Payment, Original Developer agreed to sell certain of the residential units (the "Units ") to be constructed as part of the Project for '`below market" prices, and to subject certain Units to deed restrictions limiting the prices for which such Units could be resold in the future. On February 28, 2008, CoBiz Bank ( "CoBiz ") made certain loans (collectively, the "CoBiz Loan ") to Original Developer in order to facilitate development of the Project. The CoBiz Loan, as subsequently modified, was in the stated principal amount of $18,000,000, but the current outstanding principal amount thereof is estimated to be in excess of $20,000,000. In connection with the CoBiz Loan, Original Developer, Eagle County and CoBiz entered into a Tri -Party Agreement, pursuant to which Eagle County subordinated the County Agreement to the CoBiz Loan. 946551 7 C The Project has not proceeded as anticipated. and Original Developer is presently in default under the terms of the CoBiz Loan and the County Agreement. Stratton Plats Homes, LLC ( "New Developer ") has entered into a Kcal Estate Purchase and Sale Agreement (the "Purchase Agreement ") with Original Developer, pursuant to which it has agreed to acquire the Project, subject to the CoBiz Loan, provided that the CoBiz Loan is modified in a manner satisfactory to New Developer and to CoBiz (as so modified, the "Modified CoBiz Loan "). One of the conditions to New Developer's agreement to acquire the Project, and one of the conditions to CoBiz's willingness to modify the Col3iz Loan, is the execution of an agreement with the County satisfactory to both New Developer and CoBiz. This letter shall constitute such agreement. 1. Consent to Transfer. The County hereby consents to the transfer of the Project to New Developer. 2. The County Agreement. The parties agree that the County Agreement shall not be binding on New Developer, CoBiz or the Project, and that neither Ncw Developer nor CoBiz shall have any responsibility to perform the obligations of Original Developer under the County Agreement or to comply with the County Agreement with respect to the sale of units constructed as part of the Project. 3. New Senior Loan. Ironwood Capital, LLC ("Senior Lender ") has agreed to make a new loan (the "New Senior Loan ") to New Developer, to fund the additional costs of developing the Project and constructing Units thereon. The basic terms of the New Senior Loan are summarized on Exhibit B attached hereto. 4. - Modified CoBiz Loan. Upon New Developer's acquisition of the Project and the closing of the New Senior Loan, CoBiz has agreed to modify the CoBiz Loan in certain respects, including a reduction in the current outstanding principal balance thereof, the elimination of all accrued interest thereon, and the bifurcation of the remaining principal balance thereof into two tranches. The basic terms of the Modified CoBiz Loan are summarized . on Exhibit C attached hereto. 5. The County Payment. New Developer agrees that to the extent that Net Sale Proceeds (as defined below) from the sale of Units exceed all amounts (including principal, interest, contingent interest, fees, costs and expenses, and all other amounts) required to repay the New Senior Loan and the Modified CoBiz Loan in full, New Developer shall pay such Net Sale Proceeds to the County until such time as the County has received an amount equal to the County Payment, plus interest at a rate of six percent (6 %) compounded annually. The County agrees that the County Payment shall be payable only from Net Sale Proceeds after repayment of the New Senior Loan and the Modified CoBiz Loan, that the right of the County to receive the County Payment shall be subordinate to the New Senior Loan and the Modified CoBiz Loan, and that the County shall have no other rights against New Developer, CoBiz or the Project to recover the County Payment. "Net Sale Proceeds" as used in this paragraph means the proceeds generated from sales of Units after the payment of all - costs incurred in connection with the construction, ownership, marketing and sale of the Units. 946551.7 2 6. Affordable Housing. Since the County Agreement shall not be binding on New Developer, the sale of any unsold existing units and all additional units constructed by New Developer (collectively, the New Units ") shall not be subject to the affordable housing restrictions contained in the County Agreement. However, based on the current real estate market, the County and New Developer agree that a reduced number of deed restricted units shall be necessary. Accordingly, one -third (1/3) of the New Units shall be sold with a non price- capped restrictive covenant as set forth below. Accordingly and in order to allow the County to maintain "affordable housing" restrictions on certain Ncw Units, New Developer agrees as follows with respect to the sale of New Units: (a) New Developer shall be responsible for the recording in the real estate records of Eagle County, Colorado a restrictive covenant of one third (1/3) of all New Units prior to conveyance of such Units to an initial purchaser thereof. New Developer shall be entitled to determine the types, locations and timing of the New Units to be so restricted. The restrictive covenants shall require that the such Units be sold to qualified buyers meeting Eagle County's eligibility requirements as set forth in the portions of Article V, Sections 100 through 120 of the Eagle County Local Resident Housing Guidelines that are indicated on Exhibit D attached hereto (the "Applicable Requirements ") (including any amendments thereto provided such - amendments relate solely to local resident qualifications) or to local employers or entities purchasing such units for purchase or rent by their employees pursuant to said requirements. It is the intent of this Agreement to limit the restrictive covenant to local resident requirements only, and no portion of the Eagle County Local Resident Housing Guidelines other than the Applicable Requirements shall apply. New Developer and subsequent owners may set the initial and resale pricing as they deem appropriate. (b) New Developer will provide the County with the right to purchase each New Unit that New Developer constructs on a "speculative" (not pre -sold) basis, or to have such New Unit purchased by a person or entity designated by the County, prior to selling such New Unit to any other purchaser. This right shall continue for a period of 30 days following written notice from New Developer to the County stating that a speculative New Unit is being constructed and is available for sale, and specifying the price for such New Unit. If the County or its designee purchases a New Unit, such Unit shall count toward the one -third requirement set forth in Section 6(a) above, and the County may subject such New Unit to such additional "affordable housing" restrictions as it may elect. (c) The County shall have no obligation to provide down payment assistance or any other financial assistance to persons or entities purchasing New Units from New Developer. However, if the County elects to provide any such assistance, it may as a condition to providing such assistance require that the purchaser of the New Unit agree to such additional "affordable housing" restrictions as the County may - elect, including but not limited to the imposition of price appreciation caps, and such Unit shall count toward the one -third requirement set forth in Section 6(a) above. 946551 7 (d) The County may enter into such arrangements with previous purchasers of Units as it may desire with respect to the affordable housing restrictions to which such Units are subject; provided, however, that any such arrangements shall be without liability or obligation on the part of New Developer or CoBiz. 7. Notices. Any notices, communications and waivers 'under this letter agreement shall he in writing and shall be (i) delivered in person, (ii) mailed, postage prepaid, either by registered or certified mail, return receipt requested, or (iii) sent by overnight express carrier, addressed in each case as follows: To the County: Bryan Treu Eagle County Attorney 500 Broadway Box 580 Eagle, Colorado 81621 Attention: County Attorney To New Developer: Stratton Flats Homes, LLC 3855 Lewiston Street Suite 100 Aurora, Colorado 80011 Attention: Brian Pauls With a copy to: Campbell Killin Brittan & Ray, L1.,C 270 St. Paul Street, Suite 200 Denver, Colorado 80206 Attention: J Kevin Ray To CoBiz: CoBiz Bank 821 17` Street Denver, Colorado 80202 Attention: Cyd D. Petre With a copy to: Otten, Johnson, Robinson, Neff & Ragonctti, P.C. 950 Seventeenth Street, Suite 1600 Denver, Colorado 80202 Attention: Michael Westover or to any other .address as to any of the parties hereto, as such party shall designate in a written notice to the other parties hereto. All notices sent pursuant to the terms of this paragraph shall be deemed received (i) if personally delivered, then on the date of delivery, (ii) if sent by overnight, express carrier, then on the next business day immediately following the day sent, or (iii) if sent by registered or certified mail, then on the earlier of the third business day following the day sent or when actually received. 8. Further Assurances. Each party to this letter agreement agrees that it will, upon request by any other party, execute such other documents as may be reasonably requested in order to carry out the intent and purposes hereof. 946551.7 4 9. Binding Effect. At such time as New Developer acquires the Project, this letter agreement shall be binding upon the County, ECHA, New Developer and CoBiz, together with their respective successors and assigns. Please sign below to indicate your agreement to the terms set forth in this letter. We look forward to working with you. Very truly yours, STRATTON FLATS HOMES, LLC, a Colorado limited liability company By: ✓B rian Pauls, Authorized Signatory COBIZ BANK, a Colorado corporation doing business as Colorado Business Bank By: Cyd D. Pet - Senior.Vic- resident 94655L7 5 ACKNOWLEDGED. ACCEPTED AND AGREED: EAGLE COUNTY, COLORADO Attest: Y , tArice By: Arta— C. Fik A..,,__________ By: d ip, , p _,..1Au ., ,,, 4N Name: c5CUra, S 4 /411er Clerk to the I oard Title: Opel Licirna,n -.tome EAGLE COUNTY HOUSING AND DEVELOPMENT AUTI-IORI" Y Atte : II , . By 41 , By: ® i I A___ 4 G , 04 Name: 0, g, 4 ( Secretary to the Board Title: C r .Mth , , , . r NW 946551.7 6 EXHIBIT A (the Project) PARCEL A: ALL OF THE FINAL PLAT OF STRATTON FLATS PLANNED UNIT DEVELOPMENT, - FILING •1, RECORDED MARCH 21, 2008 UNDER RECEPTION NO. 200806090, COUNTY OF EAGLE, STATE OF COLORADO, EXCEPT THOSE PORTIONS CONTAINED IN MAPS RECORDED JANUARY 22, 2009 UNDER RECEPTION NOS. 200900843 AND 200900844; AND IN INSTRUMENTS RECORDED FEBRUARY 23, 2009 UNDER RECEPTION NO. 200903106 (LOT 8); APRII. 2, 2009 UNDER RECEPTION NO. 200906001 (LOT 48); APRIL 16, 2009 UNDER RECEPTION NO. 200906970 (LOT 54); APRIL 20, 2009 UNDER RECEPTION NO. 200907145 (LOT 10); JULY 30, 2009 UNDER RECEPTION NO. 200916416 (LOT 13); SEPTiMBER 25, 2009, UNDER RECEPTION NO. 200921128 (LOT 9); AND FEBRUARY 17, 2010, UNDER RECEPTION NO. 201003129 (LOT 7). PARCEL 8: ALL OF THE FIRST AMENDMENT TO FINAL PLAT OF STRATTON FLATS PLANNED UNIT DEVELOPMENT, FILING 1, RECORDED JANUARY 22, 2009 UNDFR RECEPTION NO. 200900843, COUNTY OF EAGLE, STATE OF COLORADO, EXCEPT THOSE PORTIONS CONTAINED IN MAP RECORDED JANUARY 22, 2009 UNDER RECEPTION NO. 200900844. PARCEL C: ALL OF THE FIRST PLANNED COMMUNITY MAP OF STRATTON FLATS PLANNED UNIT DEVELOPMENT, FILING 1, PARCEL 3 RECORDED JANUARY 22, 2009 UNDER RECEPTION NO. 200900844, COUNTY OF EAGLE, STATE OF COLORADO, EXCEPT THOSE PARCELS CONVEYED IN INSTRUMENTS RECORDED MARCH 5, 2009 UNDER RECEPTION NO. 200903855 (LOT 204); APRIL 2, 2009 UNDER RECEPTION NO. 200905998 (LOT 203); AND MAY 29, 2009 UNDER RECEPTION NO. 200910446 (LOT 201). 046551 7 A-1 EXHIBIT B (Summary of New Senior Loan) Lender: Ironwood Capital, LLC Borrower: Stratton Flats Homes, LLC Principal Amount: Approximately $3,500,000, revolving Maturity Date: August 2015 Interest Rate: 10% per annum Contingent Interest: In addition to stated interest at 10% per annum, Lender shall receive certain payments of contingent interest to the extent proceeds from the sale of Units exceed the amount necessary to repay principal and stated interest in full. Such contingent interest payments are described and provided for in the documents governing the New Senior Loan. Collateral: A first priority lien on the Project. 946551.7 13-1 EXHIBIT C (Summary of Modified Col3iz Loan) Lender: • CoBiz Bank New Borrower: Stratton Flats 1- Tomes, LL,C Total Principal Amount: $18,000,000, in two tranches Tranche A: $12,000,000, bearing interest at 5% per annum Tranche B: $6,000,000, non - interest hearing Maturity Date: August 2015 Collateral: A second priority lien on the Project. 946551.7 C-1 EXHIBIT I) (Applicable Requirements) [See attached] 94655, 7 D- CHAPTER V — OWNING AND RENTING LOCAL - RESIDENT HOUSING SECTION 5 -100 Eligibility Affordable I- lousing units shall be owned or rented only by (1) Eligible Households that include at least one Qualified Employee and that meet the eligibility requirements provided for in this Chapter or (2) employers of Qualified Employees. Purchasers must provide a down payment on the Affordable Housing unit in an amount no Tess than 1 percent of the purchase price. Resident- Occupied Housing must be owned and occupied, except as specifically provided in Section 5 -170, by an Eagle County resident who makes the Resident- Occupied Housing his or her Primary Residence. i-lousing unit. In determining the priority of Eligible Households for Affordable Housing units, the Pr• Administrator may award points based upon the following criteria in order of impo r. nce: Gross Household Income in relation to purchase price (preferring Eligible Household ith fewer financial options); length of employment in Eagle County; proximity of wo to housing; current ownership of Affordable Housing; length of residency in Eagle County• service for governmental and public - service entities in Eagle County; and intergovernmental . _reements. For all Affordable Housing three- Bedroom units, priority sha •e given to Eligible Households who have a Household Size of four or more persons regal. ess of their Household's cumulative total points. Similarly, for all four or more Bedroom e fordable Housing units, priority will be given to Eligible Households who have a Househ• i Size of five or more persons regardless of the Household's cumulative total points. If two individuals are applying jointly, • y the higher priority applicant will be considered in determining an Eligible Household', •riority. Priority for larger units shall be assigned based on Household size. This prioritiza'.n shall be made pursuant to Administrative Procedures promulgated by the Prograi • dministrator. Eligible Households i' .y have no more than two occupants per bedroom at any time. For example, a house . d of 5 people does not qualify for a two bedroom unit. if two or me qualified bids are submitted at the highest bid price and the bidders have equal priority • the selection procedure, point ties shall go to the 1- lousehold with the greater Hot old Size. if this does not resolve the tie, the Program Administrator shall hold a lottery to - +er ^pine *he winning Eligiblo I lousehold. SECTION 5 -110 Employment Qualification For as long as the Household owns or rents the Affordable Housing unit (A) all members of an Eligible Household must cumulatively earn at least 75 percent of the Household's Gross Household income in Eagle County or (B) at least one occupant -owner must occupy the Affordable Housing unit as his or her primary residence and must be a Qualified Employee pursuant to the following criteria: 1. Has earned a living primarily in Eagle County by having worked an average of at least thirty (30) hours per week on an annual basis at a business with an office or job site physically located in Eagle County (multiple jobs in Eagle County may be combined to reach 30 hours per week); or 2. Has been hired for a job in Eagle County on a permanent basis (meaning that there is an expectation that the employment will continue for a period of at least six (6) months) to work at least thirty (30) hours per week; or 16 . 3. Is over the age of sixty (60) and has earned a living primarily in Eagle County (by having worked an average of at least 30 hours per week for the previous rive years or for five (5) years immediately prior to his retirement working a minimum of 8 months of each year employed); or 4. is a Disabled Person who has been a full -time employee in Eagle County (subject to the above exceptions) for a minimum of two years immediately prior to his or her disability or has been granted an exception to the minimum of 30 hours per week in order to continue with a federal or state benefit program through the Division for Developmental Disabilities (state) or SSI (federal), if the person works the maximum number of hours per week the program will allow; or 5. Is a single parent with one or more Dependents, with at least one being under the age of five (5) or enrolled full -time in a school in Eagle County. SECTION 5 -120 Limits on Owning Other Real Estate No member of an Eligible Household or member of a household owning a Resident- Occupied unit, including, but not limited to, spouses and children under 18 years of age, may own residential real estate anywhere as of closing or signing the lease for the Local - Resident I- lousing unit, subject to the following exceptions: 1. If the Eligible Household member is currently an owner of an Affordable For -Sale Housing unit, and he or she seeks to sell his or her existing unit and purchase another Affordable For -Sale 1-lousing unit contemporaneously; or 2. If the relevant household member has leased his existing unit located outside of Eagle County at a market rate rent (leases to immediate family members do not qualify) for a period of at least one (1) year, and submits annual verification that the property remains leased at a market rate. For an Eligible Household member whose business is the construction and sale of residential properties or the purchase and resale of such properties, the properties that constitute inventory in such and the business shall not constitute ownership of other residential real estate. Subject to the exceptions above, during ownership of a Local- Resident I- lousing unit, no household member shall own any interest alone or in conjunction with others, in any other developed residential real estate in Eagle County. Residential real estate that is owned by a member of a prospective occupant of Local - Resident Housing may not deed residential real estate to a corporation or other person or entity except at fair market value nor may residential real estate be deeded to a corporation or other legal entity in which the household member has any financial interest in order to meet these requirements. All purchasers and renters of Affordable Housing must have Gross Household Income . s than 140 percent AMI. Eligibility for Affordable For -Sale Housing is also lit • r, o Households with total assets with a market value of no more than 150 percent (1 - ' es) the price of the unit to be purchased, excluding government - qualified retirerne - ounts. There are no income caps or asset limitation : .urchasers of Resident- Occupied units. SECTION 5 -140 Rental ofA I .le Housing by Qualified Employers for Employees Qualified Emplo - nay purchase and lease Affordable Housing to employees who arc members of Eli 7 i • ouseholds. Qualified Employers may not impose additional deed restrictions to 17