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Home My WebLink AboutECHDA19-012 Spring Creek Loan Term SheetB-1 12596259.4 May 21, 2019 Re: ECHDA Discussion Term Sheet - $500,000 Loan (the “Loan”) This nonbinding term sheet ("Term Sheet") serves to outline the general terms and conditions under which the Eagle County Housing and Development Authority ("ECHDA") will make the nonrecourse loan to Spring Creek Gypsum LLLP, the ownership entity of Phase 1 of the Spring Creek Apartments project (the “Project”), which will be constructed on the property located in Gypsum (the “Property”). This Term Sheet does not constitute a binding agreement. PROJECT Phase 1 to consist of 150 LIHTC units; 142 at 60% AMI, 4 at 50% AMI, and 4 at 30% AMI, and Phase 2 to consist of 132 units with 50% of the units restricted to households with incomes at or below 80% AMI and the remaining 50% of the units restricted to households with incomes at or below 120% AMI, to be constructed in Gypsum and known as Spring Creek Apartments. BORROWER Spring Creek Gypsum LLLP, a Colorado limited liability limited partnership LENDER Eagle County Housing and Development Authority (“ECHDA”) LOAN AMOUNT $500,000 TERM The later of (a) 15 years and (b) 90 days after the maturity date of the Fannie Mae-insured senior permanent loan. Loan can be prepaid at any time with no prepayment penalty. ORIGINATION FEE; LEGAL FEES The origination fee is waived. Borrower agrees to reimburse ECHDA for its legal fees, costs and expenses for the preparation and negotiation of the Loan Documents for a not-to-exceed amount of $5,000, which shall be payable to ECHDA whether or not the loan closes. INTEREST RATE 3%, compounded annually EAGLE COUNTY HOUSING AND DEVELOPMENT AUTHORITY 500 Broadway P.O. Box 850 Eagle, Colorado 81631 Phone: (970) 328-8773 Fax: (970) 328-8787 DocuSign Envelope ID: 7F3ECE3C-627A-4FD5-8A08-B7E34F34488B 12596259.4 PAYMENT TERMS The ECHDA Loan shall be payable from Net Cash Flow, as defined in the Amended and Restated Agreement of Limited Partnership for Spring Creek Gypsum LLLP ("LPA"). The ECHDA Loan has been included in the waterfall provisions of Section 11.03 of the LPA ("Waterfall") and the Loan shall be junior to the two Colorado Division of Housing loans and senior to the seller carryback loan. Payments shall be made to the extent of 25% of remaining Net Cash Flow, to the required payments of principal and interest on the ECHDA loan after all of the amounts in (i) through (vi) of Section 11.03(b) of the LPA have been satisfied. In the event either of the CDOH loans is retired, the Net Cash Flow that had been applied to such CDOH loan shall be applied equally to the remaining CDOH loan and the ECHDA Loan, and if both CDOH loans have been retired, all Net Cash Flow that had been applied to the CDOH loans shall be applied to the ECHDA Loan. Interest on the Loan will accrue at 3%, payable annually, with principal payments of $100,000 per year beginning in year 11 (the 11th anniversary of the date of the mortgage conversion to permanent financing). Payments will be subject to the restrictions in the Chase/Fannie Mae subordination agreement, e.g., if the obligations in Section 11.03(b)(vi) of the LPA Waterfall provision are satisfied prior to year 11, distributable cash flow could be used to pay accrued interest on the ECHDA note, with principal payments still beginning in year 11. AVAILABILITY OF FUNDS 100% of Loan funds will be made available upon the later to occur of (i) receipt of the certificate of occupancy for the fourth apartment building, and (ii) April 2020, subject to availability of funds. REPORTING REQUIREMENTS The ECHDA shall receive reports and other information as provided in that certain Outline of Special Limited Partner Terms of even date herewith (“SLP Term Sheet”). RENTAL RESTRICTIONS Phase 1 - Rent and income shall be restricted to 60% AMI by the LIHTC requirements, which will be in effect for the term of the Loan, and also restricted by the 50-year affordability covenant to be recorded against title referenced in the SLP Term Sheet. Phase 2 – Rent and income for 50% of the project shall be restricted to 80% AMI, and for the balance of the project to 120% AMI, per the terms of the 50-year affordability covenant to be recorded against title referenced in the SLP Term Sheet. LOAN DOCUMENTS The Borrower will enter into Loan Agreement, Subordinate Note, and Deed of Trust with the Lender. The Borrower will also execute a Subordination Agreement related to the seller carryback loan upon request of Lender. DocuSign Envelope ID: 7F3ECE3C-627A-4FD5-8A08-B7E34F34488B 12596259.4 RIGHT TO CURE The ECHDA shall have the right (but not the obligation) to cure any default on the Project as a means of maintaining affordability. DEFAULT OR FORECLOSURES Default interest rate will be 7%, compounded annually. FNMA PROVISION To the extent required by FNMA requirements related to insuring the senior permanent loan, the ECHDA Loan Documents shall contain a provision substantially similar to: The indebtedness evidenced by this Note is and shall be subordinate in right of payment to the prior payment in full of the indebtedness evidenced by a Multifamily Note (and any schedules) dated as of even date herewith in an original principal amount not to exceed $19,500,000, executed by Borrower and payable to the order of [Zions Bancorporation, national association, as bond trustee] (“Senior Lender”), to the extent and in the manner provided in that certain Subordination Agreement dated as of even date herewith between the payee of this Note, and Senior Lender and Borrower (the “Subordination Agreement”). The Deed of Trust (and any exhibits) securing this Note is and shall be subject and subordinate in all respects to the liens, terms, covenants and conditions of the Multifamily Deed of Trust (and any exhibits) securing the Multifamily Note and the terms, covenants and conditions of the Multifamily Loan and Security Agreement evidencing the terms of the Multifamily Note, as more fully set forth in the Subordination Agreement. The rights and remedies of the payee and each subsequent holder of this Note under the Deed of Trust (and any exhibits) securing this Note are subject to the restrictions and limitations set forth in the Subordination Agreement. Each subsequent holder of this Note shall be deemed, by virtue of such holder’s acquisition of the Note, to have agreed to perform and observe all of the terms, covenants and conditions to be performed or observed by Subordinate Lender under the Subordination Agreement. LIHTC INVESTOR RIGHTS To the extent required by Riverside, the Borrower’s LIHTC investor, the ECHDA Loan Documents shall contain provisions permitting certain transfers of limited partnership interests, permitting removal and substitution of general partner by the investor limited partner, and notice and cure rights for the investor limited partner. This Term Sheet is a list of proposed terms that may or may not become part of definitive loan documents. It is not based on any agreement between the parties or a commitment to make a loan or extend credit. Borrower, ECHDA and Lender understand and acknowledge that, except for Borrower’s agreement to reimburse ECHDA for its legal fees, costs and expenses as provided herein, no legal obligations are created by this Term Sheet, and neither Borrower nor Lender will have any legal obligations with respect to the proposed transaction (unless and until a definitive agreement and loan documents are executed and delivered by both parties and approved and ratified by the Board, as provided above, and only as provided therein). This letter is not intended to impose any obligation on any party, and in particular it does not impose on any party any obligation to bargain in any way other than at arm's length. This paragraph supersedes all other conflicting language. DocuSign Envelope ID: 7F3ECE3C-627A-4FD5-8A08-B7E34F34488B 12596259.4 Please acknowledge your acceptance of this letter of intent by executing in the space provided below and returning a copy of this letter to the undersigned. Sincerely, EAGLE COUNTY HOUSING AND DEVELOPMENT AUTHORITY ______________________________ Jeanne McQueeney Chair DocuSign Envelope ID: 7F3ECE3C-627A-4FD5-8A08-B7E34F34488B 12596259.4 APPROVED AND ACCEPTED THIS 21st DAY OF MAY, 2019 BORROWER Spring Creek Gypsum LLLP, a Colorado limited liability limited partnership By: Spring Creek Gypsum GP LLC, General Partner By: Spring Creek Apartments LLC, Manager By: Polar Star Development LLC, Manager By:_____________________________ Name: Gerald E. Flynn Title: Managing Member INVESTOR LIMITED PARTNER: Riverside Spring Creek Apartments Investor, LLC, a Delaware limited liability company By: Riverside Capital, LLC, its Managing Member By:___________________________ Name: Title: 11990777_8.docx DocuSign Envelope ID: 03A94C2B-89DD-46B4-B35E-70D40DD7476B Vice President Sean Creedon DocuSign Envelope ID: 7F3ECE3C-627A-4FD5-8A08-B7E34F34488B