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Home My WebLink AboutECHDA22-02 Spring Creek LLC_First AdmendmentUSA.604881608.1/8ZI 1 FIRST AMENDMENT TO ADDENDUM TO OPERATING AGREEMENT OF SPRING CREEK II LLC This First Amendment to Addendum to Operating Agreement of Spring Creek II LLC (this “Amendment”) is made as of _____4/5/2022___, by and among Spring Creek Apartments LLC, a Colorado limited liability company (the “Manager”), PCS Holdings LLC., a Colorado limited liability company (the “Member”), and Eagle County Housing and Development Authority, a Colorado public body, corporate and politic (the “Special Member”). Background A. The parties entered into that certain Addendum to Operating Agreement of Spring Creek II LLC dated February 1, 2021 (the “Original Addendum”). B. As required by section 3(a) of the Original Addendum, Spring Creek II LLC granted the Special Member a Rental and Occupancy Covenant on February 8, 2021, which instrument was recorded on February 10, 2021 at Reception Number 202102922 in the real property records of Eagle County, Colorado (the “Original Covenant”). C. The Original Covenant subjected the property owned by Spring Creek II LLC (the “Property”) to a 50-year covenant, restricting use of the Property as follows: (A) 66 units in the apartment buildings on the Property were restricted for occupancy by households with incomes at or below 80% of Area Median Income (“AMI”), and (B) 66 units in the apartment buildings on the Property were restricted for occupancy by households with incomes at or below 120% of AMI. D. Subsequent to recordation of the Original Covenant, the ECHDA Board has determined that individuals or families whose income is one hundred percent (100%) or less of AMI are “persons of low income” for purposes of C.R.S. Title 29, Article 4, Part 2, as further detailed in ECHDA Resolution 2021-043. E. The parties now desire to amend certain terms of the Original Addendum (and, by separate instrument, the Original Covenant) to reflect the determination of the Special Member in ECHDA Resolution 2021-043 and the conditions of the Eagle County market. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. Section 3(a) of the Addendum is hereby amended and restated in its entirety to read as follows: “The Project shall be subject to a Rental and Occupancy Covenant for the benefit of the Special Member which shall have a perpetual term, and which shall require that (a) thirty- three (33) Units shall have rents not exceeding thirty percent (30%) of the adjusted income of a family whose annual income equals eighty percent (80%) of AMI, as determined by the Secretary of Housing and Urban Development (“HUD”), with adjustments for the number of bedrooms in the Unit, and shall be occupied by individuals or families whose DocuSign Envelope ID: C4F0C845-40EA-4EB8-A508-5A35DCF6B6B7 2 income is one hundred and fifty percent (150%) or less of the area median income for the Eagle County, Colorado area (“AMI”), with adjustments for smaller and larger families; and (b) of the remaining ninety-nine (99) Units, (i) at least twenty-seven (27) Units shall have rents not exceeding thirty percent (30%) of the adjusted income of a family whose annual income equals eighty percent (80%) of AMI, as determined by HUD, with adjustments for the number of bedrooms in the Unit, and shall be occupied by individuals or families whose income is eighty percent (80%) or less of AMI, with adjustments for smaller and larger families, and (ii) the remainder of the Units shall have rents not exceeding thirty percent (30%) of the adjusted income of a family whose annual income equals eighty percent (80%) of AMI, as determined by HUD, with adjustments for the number of bedrooms in the Unit, and shall be occupied by individuals or families whose income is one hundred percent (100%) or less of AMI, with adjustments for smaller and larger families (the “ECHDA Covenant”); and the Regulatory Agreement for the benefit of the Colorado Housing and Finance Authority (“CHFA Covenant,” and together with the ECHDA Covenant, the “Regulatory Agreements”). If the Project ceases to comply with the affordability restrictions set forth in the Regulatory Agreements, the Special Member may withdraw from the Company on the terms and subject to the procedures set forth in Section 7(b). Except as provided in this Section 3 and in Sections 4, 5 and 7 below, the Special Member shall not be entitled to withdraw as a member in the Company as long as the Project remains subject to and complies with the Regulatory Agreements.” 2. Except as amended by this Amendment, the terms of the Original Addendum remain in full force and effect. 3. This Amendment may be executed in counterparts, each of which, when taken together, shall be deemed to be one and the same instrument. The parties approve the use of electronic signatures, governed by the Uniform Electronic Transactions Act, C.R.S. §§ 24-71.3- 101 et seq. The parties will not deny the legal effect or enforceability of this Amendment solely because it is in electronic form or because an electronic record was used in its creation. (The balance of this page is intentionally left blank.) DocuSign Envelope ID: C4F0C845-40EA-4EB8-A508-5A35DCF6B6B7 The parties have caused this Amendment to be duly executed as of the day and year first above written. MANAGER: SPRING CREEK APARTMENTS LLC, a Colorado limited liability company By: Polar Star Development, LLC, Manager By: ___________________________ Gerald E. Flynn, Managing Member MEMBER: PCS HOLDINGS LLC., a Colorado limited liability company By: ___________________________________ Rick Patriacca, President SPECIAL MEMBER: EAGLE COUNTY HOUSING AND DEVELOPMENT AUTHORITY a Colorado public body, corporate and politic By:_____________________________________ Name: __________________________________ Title: ___________________________________ DocuSign Envelope ID: C4F0C845-40EA-4EB8-A508-5A35DCF6B6B7 Jeanne McQueeney Commissioner Eagle County Housing and Development Authority Requested changes to Spring Creek workforce housing development partnership Dept POC: Jill Klosterman & Kim Williams March 17, 2022 Issue The developer of the Spring Creek Apartments has asked the Eagle County Housing and Development Authority (“ECHDA”) to amend its partnership documents to increase the number of units subject to a property tax exemption. Additionally, it has requested that ECHDA consents to a change in the owner’s Operating Agreement. Additional details can be found in this previous submission. Background Spring Creek Apartments Phase II (“SCA2”) contains 132 residential units. Changes to the regulatory covenant that have been requested by the owner are summarized below: Current Status Proposed ●66 units with rents and incomes at 80% AMI (property tax exempt) ●66 units with rents and incomes at 120% AMI (NO property tax exemption) ●Covenant has 50 year term ●27 units with rents and incomes at 80% AMI (property tax exempt) ●72 units with rents at 80% AMI and incomes at 100% AMI (property tax exemption) ●33 units with rents at 80% AMI and incomes at 150% AMI (NO property tax exemption) ●Covenant is perpetual Decision Details The following table lists pros and cons regarding supporting these changes: Pros Cons ●Caps rents on ALL units at 80% AMI ●Makes the covenant perpetual ●Reduces the number of units set aside for households earning less than $64,000 (80% AMI for 2 people) ○The owner has indicated it has been difficult to qualify tenants if there is more than one working adult. ●Increases the maximum income from 120% to 150% ○The owner has indicated they expect to be able to qualify more tenants with 2 working adults. ○ECHDA supports mixed income developments. ●Does not meet the ECHDA resolution regarding financial feasibility ○The resolution implies that agreements are made prior to building construction and was approved after the original Spring Creek partnership was negotiated. Recommendation The result of this change is that the property will receive property tax exemption for an additional 33 units. The 33 units that can be occupied by households earning 150% of AMI ($120,000 for a two-person household) will continue to pay property taxes. Additionally, staff recommends that ECHDA consent to the changes in the Operating Agreement which do not significantly impact the rights of ECHDA. Staff recommends that these changes are approved. DocuSign Envelope ID: C4F0C845-40EA-4EB8-A508-5A35DCF6B6B7