HomeMy WebLinkAboutECHDA24-03 Conditional Commitment Letter_Eagle VillasEagle County Housing and Development Authority Matt Scherr,Chair 970-328-8605 www.eaglecounty.us EAGLE COUNTY HOUSING AND DEVELOPMENT AUTHORITY CONDITIONAL FUNDING COMMITMENT LETTER February 27,2024 Mr.Connor Larr Ulysses Development Group LLC 210 University Blvd,Suite 460, Denver,CO 80206 RE:ECHDA Conditional Funding Commitment Letter for the benefit of Eagle Villas Apartments located in Eagle,Colorado Dear Mr.Larr: Eagle County staff has reviewed the application for funding submitted by Ulysses Development Group (together with any designated affiliate of Ulysses Development Group,“UDG”)for the acquisition and resyndication of Eagle Villas Apartments,a 120-unit low income apartment complex located in Eagle,CO (the “Project”).The Project consists of 120 low income rental units with rental rates affordable to households earning between 45-60%AMI.The Project was originally financed utilizing the Low Income Housing Tax Credit (“LIHTC”)program that has preserved the low rental rates utilizing a Land Use Restriction Agreement (“LURA”).The 30 year term of the LURA for 100 units expires at the end of 2024.The remaining 20 units are subject to a LURA that expires in 2047. UDG proposes to acquire the Project in the spring of 2024 and in the spring of 2025 will resyndicate the Project utilizing the LIHTC program to extend the Project’s affordability for 60 years.UDG will commit to making 108 of the units affordable to households earning between 45%-60%AMI with up to 12 units affordable to households earning up to 80%AMI.The proposed resyndication plan includes capital investment estimated at $8 million to include internal upgrades,external upgrades,and sustainability upgrades. UDG has requested the following from ECHDA:$6.5 million in subordinate debt,of which $3.5 million will be repaid to ECHDA at resyndication,ECHDA’s participation in the project as a special limited partner to effectuate property,sales,and use tax exemption,Eagle County’s private activity bond allocation for both 2024 and 2025,ECHDA’s application to the state of Colorado for $13.2 million in Private Activity Bond Capacity from the Statewide Balance,and an inducement resolution of $29 million in tax exempt bonds. DocuSign Envelope ID: 8ED9BF45-1205-4815-B6AC-E525F9EB72AF At a regularly scheduled public meeting held on February 27,2024,the ECHDA Board reviewed UDG’s request for funding,and heard presentations from staff and UDG representatives.Based on the foregoing,the ECHDA Board approves the following conditional funding commitment, subject to the terms and conditions set forth below (“Commitment”): 1.Receipt of an executed Purchase and Sale agreement between UDG and Eagle Villas LLC for the purchase of the 120 unit Eagle Villas apartment project by March 30,2024. 2.A $6,500,000 loan will be made by ECHDA to UDG at Project acquisition (“Loan”).The Loan is subject to approval and execution of a loan agreement between UDG and ECHDA that outlines the funding amount,timing,and other terms and conditions.UDG understands and agrees that an estimated $3,500,000 will be repaid to ECHDA at resyndication,with a maximum $3,000,000 long term loan.UDG understands and agrees that any loan agreement must be approved by the ECHDA Board at a regularly scheduled public meeting. 3.Upon resyndication,UDG will invest an estimated $8 million in capital improvements that will include internal (kitchen,bath,appliances),external (roofs,parking lot resurfacing)and sustainability upgrades (heat pumps,PV,to facilitate a transition to high efficiency electric utilities and the feasibility of a geothermal system)to the Project.UDG will share improvement plans with ECHDA. 4.Upon approval of participation by the ECHDA Board,ECHDA will acquire an ownership interest in and become a special limited partner of a limited liability limited partnership,or similar entity,formed to own the units.The ECHDA ownership interest is intended to facilitate qualification of the Project for an exemption from real property taxes and from sales and use taxes,to the extent attributable to the units,and as otherwise approved by applicable governmental authorities.Participation by ECHDA in the limited liability limited partnership is subject to approval and execution of a limited partnership agreement between UDG and the ECHDA that outlines the terms of the partnership,roles of the partners and length of exemption.UDG understands and agrees that the limited partnership agreement must be approved by the ECHDA Board at a regularly scheduled public meeting.Upon the admission of ECHDA to the limited liability limited partnership,ECHDA agrees to use its commercially reasonable efforts,at no cost to ECHDA,to take such actions as reasonably necessary to facilitate the tax exemption for the 120 units.Notwithstanding the foregoing,UDG understands and acknowledges that the proposed tax exemption is subject to approval each year by the Eagle County Assessor and may be subject to change based on State law. 5.ECHDA will submit an application for an allocation of up to $13,200,000 of the State of Colorado’s 2024 Statewide Private Activity Bond Balance on behalf of UDG to support the Project.The application will be submitted on or prior to the March 1,2024 deadline. 6.ECHDA will execute and approve agreements required to be included as part of the Statewide Private Activity Bond Balance application,including,but not limited to an DocuSign Envelope ID: 8ED9BF45-1205-4815-B6AC-E525F9EB72AF Inducement Resolution,a Due Diligence Certificate,and Statewide Balance Allocation request. 7.ECHDA will support UDG’s request to Eagle County Government and to any other entity that has excess Private Activity Bond Capacity,all of which will be used to support the resyndication of the Project.UDG will be responsible for securing all Private Activity Bond Capacity necessary to fund the Project. 8.This Commitment shall terminate 12 months from the date of the ECHDA’s approval of this Commitment. 9.The ECHDA shall not disburse any proceeds from the Loan until UDG demonstrates to the satisfaction of ECHDA that it has secured additional funding commitments from other sources sufficient to fully fund the acquisition of the Project.UDG agrees that upon request of County staff,it shall provide ECHDA or its representatives with access to its books and records and proformas for the Project and shall further provide copies of any commitment letters of funding agreements from other sources for the funding of the Project. 10.UDG agrees that,upon resyndication,a LURA will be recorded against all 120 units preserving the affordability of the majority of units at 45%-60%AMI,with no more than 12 units at 80%AMI for a minimum of 60 years. 11.UDG shall indemnify,defend and hold harmless the ECHDA,Eagle County,and any of their respective officers,agents and employees against any losses,claims,damages or liabilities for which ECHDA and/or County may become subject to insofar as an such losses,claims,damages or liabilities arise out of,directly or indirectly,this Commitment, or are based upon any performance or nonperformance by UDG or any of its sub-recipients hereunder including claims for bodily injury or personal injury including death,or loss or damage to tangible or intangible property;and UDG shall reimburse ECHDA and/or County for reasonable attorney fees and costs,legal and other expenses incurred by ECHDA and/or County in connection with investigating or defending any such loss,claim,damage,liability or action.This indemnification shall not apply to claims by third parties against the ECHDA and/or County to the extent that ECHDA and/or County is liable to such third party for such claims without regard to the involvement of UDG or to claims arising from the gross negligence or willful misconduct of ECHDA. 12.This Commitment has been issued to UDG on the basis of certain information and materials provided by UDG to ECHDA.ECHDA reserves the right to terminate or amend this Commitment based upon information which comes to its attention after the date of this letter.Any misinformation,misrepresentation,or withholding of material information incident hereto or the occurrence of any material adverse change to UDG,its funding for the Project,the composition or unit mix of the Project,the nature of the Special Limited Partnership,or the nature of the LURA shall,at the sole option of ECHDA and without limitation to any other right or remedy of ECHDA,void the DocuSign Envelope ID: 8ED9BF45-1205-4815-B6AC-E525F9EB72AF Commitment and all of ECHDA’s conditional commitments hereunder. Further, UDG and ECHDA understand and acknowledge that no legal obligations are created by this Commitment, and that neither UDG nor ECHDA will have any legal obligations with respect to the proposed transaction (unless and until definitive agreements are executed and delivered by both parties and approved and ratified by the Board, as provided above, and only as provided therein). 13. The terms of this Commitment set forth the entire agreement of the parties with respect to the subject matter hereunder, and supersedes all prior written or oral understandings with respect hereto. No modification or waiver of any provision of this Commitment shall be effective unless the same shall be in writing and signed by all the parties hereto. It is also hereby intended that this Commitment shall not survive the execution of the loan agreement and the limited liability limited partnership agreement and that once executed, the loan agreement and the limited liability limited partnership agreement shall set forth the entire agreement of the parties. Please confirm your agreement to the foregoing terms and conditions of the Commitment by signing below. Eagle County Housing and Development Authority By: ________________________________ Its: ________________________________ Ulysses Development Group By: __________________________ Its: ____________________________ DocuSign Envelope ID: 8ED9BF45-1205-4815-B6AC-E525F9EB72AF Connor Larr Matt Scherr