To: Board of Supervisors
From: John Kopchik, Director, Conservation and Development
Report Title: Termination of Regulatory Agreement - Giant Road Family Apartments in San Pablo
☒Recommendation of the County Administrator ☐ Recommendation of Board Committee
RECOMMENDATIONS:
1. ADOPT a resolution authorizing the execution and delivery of a Termination of Regulatory Agreement and Declaration of Restrictive Covenants (Termination Agreement), terminating the Regulatory Agreement and Declaration of Restrictive Covenants dated as of August 1, 2005, recorded as Instrument No. 2005-0490141-00, in connection with the County’s issuance in 2005 of (i) $3,135,000 County of Contra Costa Multifamily Housing Revenue Bonds 2005 Series A-1 (the Series A-1 Bonds), and (ii) $15,499,000 County of Contra Costa Multifamily Housing Revenue Bonds (Giant Road Family Apartments) 2005 Series A-2 (the Series A-2 Bonds) to finance the Giant Road Family Apartments, an affordable housing development located at 2832 Giant Road, in San Pablo (Property), which termination will enable the Property to be refinanced.
2. APPROVE and AUTHORIZE the Director of the Department of Conservation and Development, or designee, to execute the Termination Agreement, the form of which is on file with the Clerk of the Board.
3. AUTHORIZE the Director of the Department of Conservation and Development, or designee, to take any and all actions and execute and deliver any and all certifications, agreements, and other documents needed in connection with the Termination Agreement.
FISCAL IMPACT:
There is no negative impact on the General Fund. The County will be reimbursed by the new owner of the Property for any costs incurred in connection with the Termination Agreement. The purchase price of the Property is expected to enable the current owner to redeem the outstanding bonds in full.
BACKGROUND:
The recommended action is the adoption of a resolution by the Board of Supervisors, as the legislative body of the County, authorizing the execution and delivery of the Termination Agreement.
The County and the current owner of the Property entered into the Regulatory Agreement and Declaration of Restrictive Covenants dated as of August 1, 2005, recorded on December 22, 2005, as Document No. 2005-0490141-00 (Regulatory Agreement), in connection with the issuance of (i) $3,135,000, County of Contra Costa Multifamily Housing Revenue Bonds 2005 Series A-1 (the Series A-1 Bonds), and (ii) $15,499,000, County of Contra Costa Multifamily Housing Revenue Bonds (Giant Road Family Apartments) 2005 Series A-2 (the Series A-2 Bonds) to finance the Giant Road Family Apartments, a multifamily affordable housing rental development located at the Property. The Regulatory Agreement restricts the use of the Property during the term of the Regulatory Agreement.
The Series A-2 Bonds were previously paid in full and are no longer outstanding. The current owner proposes to sell the Property to a new owner. The new owner proposes to acquire and rehabilitate the Property by refinancing the Series A-1 Bonds and other outstanding debt secured by the Property. In connection with the refinancing of the Series A-1 Bonds, the Series A-1 Bonds are expected to be redeemed in full.
As part of the refinancing of the Property, the California Municipal Finance Authority, a joint exercise of powers agency duly organized and existing under the laws of the State of California (CMFA), and the new owner propose the issuance of new multifamily housing revenue bonds and the implementation of a Regulatory Agreement and Declaration of Restrictive Covenants dated as of June 1, 2024, which will impose new low- and moderate-income housing restrictions on the Property. The new restrictions will satisfy the Internal Revenue Code of 1986, as amended, and will extend beyond the time period covered by the Regulatory Agreement. In support of the issuance of the new housing revenue bonds, CMFA and the new owner have requested that the County agree to terminate the Regulatory Agreement.
The original financing in 2005 included Community Development Block Grant (CDBG) and HOME Investment Partnership Program (HOME) funds totaling $1,700,000. As part of the proposed refinancing, the County’s CDBG and HOME loans are proposed to be restructured. The restructuring of the existing CDBG and HOME loans will be the subject of a separate Board action.
CONSEQUENCE OF NEGATIVE ACTION:
Failure to terminate the Regulatory Agreement will prevent the refinancing and rehabilitation of the Property.
THE BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY, CALIFORNIA
and for Special Districts, Agencies and Authorities Governed by the Board
body
IN THE MATTER OF Resolution No. 2024/XX
RESOLUTION AUTHORIZING THE EXECUTION AND DELIVERY OF A TERMINATION OF REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS IN CONNECTION WITH THE REDEMPTION OF COUNTY OF CONTRA COSTA MULTIFAMILY HOUSING REVENUE BONDS (GIANT ROAD FAMILY APARTMENTS) 2005 SERIES A-1, AND OTHER MATTERS RELATING THERETO
WHEREAS, the County of Contra Costa (the “County”) and Giant Development, L.P., a California limited partnership (the “Owner”) entered into that certain Regulatory Agreement and Declaration of Restrictive Covenants dated as of August 1, 2005 (the “Regulatory Agreement”), recorded on December 22, 2005, as Document No. 2005-0490141-00 in the Official Records of the County of Contra Costa, in connection with the issuance of $3,135,000 County of Contra Costa Multifamily Housing Revenue Bonds (Giant Road Family Apartments) 2005 Series A-1 (the “2005 Series A-1 Bonds”) and $15,499,000 County of Contra Costa Multifamily Housing Revenue Bonds (Giant Road Family Apartments) 2005 Series A-2 (the “2005 Series A-2 Bonds”; and, together with the 2005 Series A-1 Bonds,” the “2005 Bonds”) to finance the multifamily housing rental project located at 2832 Giant Road, San Pablo, California (the “Property”);
WHEREAS the Regulatory Agreement provides that the Regulatory Agreement shall remain in full force and effect for the Qualified Project Period; and
WHEREAS the 2005 Series A-2 Bonds were previously paid in full and are no longer outstanding; and
WHEREAS the Owner proposes to sell the Property to Giant Development II, LP, a California limited partnership (the “New Owner”); and
WHEREAS the New Owner proposes to acquire and rehabilitate the affordable multifamily housing development located at the Property known as Giant Road Apartments; and
WHEREAS in connection with the acquisition of the Property by the New Owner, the 2005 Series A-1 Bonds will be redeemed in full; and
WHEREAS in connection with the redemption of the 2005 Series A-1 Bonds and the sale and transfer of the Property to the New Owner, the California Municipal Finance Authority, a joint exercise of powers agency duly organized and existing under the laws of the State of California, and the New Owner propose to enter into a new Regulatory Agreement and Declaration of Restrictive Covenants, dated as of June 1, 2024, (the “New Regulatory Agreement”), thereby providing for low- and moderate-income housing restrictions for the Qualified Project Period (as defined in the New Regulatory Agreement) in satisfaction of the Internal Revenue Code of 1986, as amended, which extends beyond the Qualified Project Period defined in the Regulatory Agreement; and
WHEREAS, in consideration of and subject to the execution and delivery of the New Regulatory Agreement, the County desires to terminate the Regulatory Agreement in accordance with Section 14 thereof; and
WHEREAS, the Board of Supervisors now desires to approve the Termination of Regulatory Agreement and Declaration of Restrictive Covenants in the form on file with the Clerk of the Board (the “Termination Agreement”), and to approve the execution and delivery of the Termination Agreement by the County, subject to the satisfaction of the conditions set forth in Section 14 of the Regulatory Agreement and reimbursement to the County of all costs and expenses incurred in connection with the Termination Agreement.
NOW, THEREFORE, BE IT RESOLVED, by the Board of Supervisors of the County of Contra Costa, as follows:
Section 1. The Board of Supervisors hereby finds and declares that the foregoing recitals are true and correct.
Section 2. The Termination Agreement, in the form on file with the Clerk of the Board, is hereby approved. The Director of the Department of Conservation and Development, or designee (the “Designated Officer”) is hereby authorized, for and in the name and on behalf of the County, to execute and deliver the Termination Agreement in said form, together with such additions thereto or changes therein as are recommended or approved by the Designated Officer upon consultation with Special Counsel to the County (including such additions or changes as are necessary or advisable in accordance with Section 4 hereof).
Section 3. The law firm of Stradling Yocca Carlson & Rauth LLP is hereby designated as Special Counsel to the County in connection with the Termination Agreement. The fees and expenses of such firm for matters related to the Termination Agreement are payable solely from amounts received from the Owner or New Owner.
Section 4. All actions heretofore taken by the officers and agents of the County with respect to the execution and delivery of the Termination Agreement are hereby approved, confirmed and ratified, and the Designated Officer is hereby authorized and directed, for and in the name and on behalf of the County, to do any and all things and take any and all actions and execute any and all certificates, agreements and other documents, that he may deem necessary or advisable in order to consummate the lawful execution and delivery of the Termination Agreement in accordance with this Resolution, including but not limited to any certificates, agreements and other documents necessary to consummate the transactions contemplated by this Resolution.
Section 5. This Resolution takes effect upon its adoption.