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Item N09 BOARD OF COUNTY COMMISSIONERS AGENDA ITEM SUMMARY Meeting Date: 4/15/2009 (Key West) Division/ Dept. County Attorney Bulk Item: Yes No~ Staff Contact Person/phone #: Suzanne Hutton x3470 AGENDA ITEM WORDING: Approval of Amendment NO.1 to Ground Lease for Overseas Redevelopment Company, LLC, for affordable housing project at Flagler Village. ITEM BACKGROUND: On September 20, 2006, the County entered into a ground lease with Overseas Redevelopment Company, LLC, for an affordable housing project at Flagler Village. The lease provided for 49 affordable housing units to be substantially completed by a date that was defined as being predicated on another date. Due to a number of circumstances, including both delays in construction, the expiration of building permits and the proposed change to financing of the project which would render the project for lower income clients than the lease currently provides, an extension of the term to a very defined set of dates for progress and changes of terms to comport with tax credit financing regulations is deemed to be in the interest of both parties. PREVIOUS RELEVANT BOCC ACTION: Approval of lease, Development Order, and a 380 Agreement effecting the transfers of affordable and market-rate ROGOs. CONTRACT/AGREEMENT CHANGES: N/A STAFF RECOMMENDATIONS: Approval of lease amendment. TOTAL COST: o for amendment BUDGETED: Yes No COST TO COUNTY: 0 SOURCE OF FUNDS: REVENUE PRODUCING: Yes No X AMOUNTPERMONTH~ Year APPROVED BY: County Atty ~ OMB/purchasing _ Risk Management_ DOCUMENTATION: Included X Not Required_ DISPOSITION: AGENDA ITEM # Revised 11/06 AMENDMENT NO.1 TO GROUND LEASE OVERSEAS REDEVELOPMENT COMPANY, LLC THIS Al\ffiNDMENT NO.1 TO GROUND LEASE is entered this 15th day of April, 2009, by and between MONROE COUNTY ("Lessor") and OVERSEAS REDEVELOPMENT COMPANY, LLC ("Lessee"). WHEREAS, on September 20, 2006, the parties entered into a ground lease for real property located on Stock Island, Monroe County, Florida, at Block 38, George L. McDonald's Plat, as recorded in Plat Book 1, Page 55, and a portion of the adjacent First Avenue as previously abandoned, as recorded in the Official Records of Monroe County, Florida, at Book 537, page 937; and WHEREAS, the ground lease provided for the Lessee to construct 49 Affordable Housing Units; and WHEREAS, the parties have determined that it is in the best interests of both to clarify certain terms and modify other terms of said agreement; now therefore, IN CONSIDERATION OF THE COVENANTS AND PROMISES contained herein, the parties agree as follows: 1. The Ground Lease entered between the parties on September 20, 2006, shall be amended as ~m; . A. The definition of "Affordable Restrictions" in Article I shall be amended to read: "Affordable Restrictions" shall mean the affordable or employee housing regulations as set forth in Chapter 9.5 and any other applicable sections of the Monroe County Land Development Regulations or County Code, as hereinafter amended, except that in no event shall the Lessor materially and adversely alter the obligations or rights of Lessee under this Lease or decrease the lawfully permissible sales price or rental rate for an Affordable Housing Unit to less than the specified sales price or rental rates for moderate income housing as set forth in the Land Development Regulations in effect at the time of execution of this Lease where the effect upon an owner/Sublessee/mortgagee would be to divest such person or entity of value upon which such person reasonably and fairly relied to their detriment. The substance of the Affordable Restrictions may be freely amended in the Lessor's legislative discretion, particularly with respect to administrative, monitoring and enforcement mechanisms, but any such amendment shall not materially diminish the lawfully established and equitably vested resale value or the reasonable alienability of "home~ownership" Affordable Housing Units, or in the case of rental-only units or projects, shall not materially and adversely diminish or interfere with the Lessee's substantive benefits conferred under this Lease or any of its non-administrative terms. However, Lessor may restrict Affordable Housing Unit resales and rentals to use as "Employee Housing" as defined in ORC, LLC Amend. 1 1 the Affordable Restrictions, as amended from time to time (though not in conflict with LIHTC requirements). Moreover, Lessor may establish in its Affordable Restrictions "means" or "assets" criteria that limit potential buyer or rental pools. Any such amendment shall not increase Initial Lessee's responsibilities as set forth herein. It is the intent and purpose and shall be the effect of this Lease and any Affordable Restrictions to ensure that the afford ability of Affordable Housing Units and dedicated real property upon which they are located is maintained and enforced such that any administrative rule, policy or interpretation thereof, made by Lessor or its designees relating to the maximum total amount of consideration and cost permitted to be in any way involved in a purchase or rental transaction (including but not limited to purchase price, lease assignment fees, rents or any other compensation given or received in or "outside" of a related transaction) shall never exceed the affordability criteria reasonably established by Monroe County for the dwelling units involved. In every case, the construction and interpretation of terms, conditions and restrictions imposed by this Lease and the Mfordability Restrictions shall be made in favor of ensuring that long term affordability benefits for the respective housing resources inure to the benefit of Monroe County, its economy and its community character: In all cases of conflict between local and federal LIHTC rental, tenant eligibility and other guidelines, Lessee shall be entitled to adhere to governing federal (LlliTC) requirements without being deemed in breach of this Lease or the Affordable Restrictions. B. The definition of ""Project" in Article I shall be amended to read: "Project". shall mean the required development of the Demised Premises, primarily the required construction of 49 Affordable Housing Units for sale or rent at affordable rates, but also including related infrastructure, securing of required development approvals and permits, financing for the construction of the Affordable Housing Units, marketing/renting of the Affordable Housing Units and creation of any required governing Association. C Section 6.01 shall be amended to read: Section 6.01 Lessee's Obligations. As additional Rent, and from the effective date to the commencement date, the Lessee shall pay and discharge, as they become due, promptly and before delinquency, all taxes, assessments, water and sewer rents, rates and charges, transit taxes, charges for public utilities, excises, levies, licenses and permit fees and other governmental charges, general and special, ordinary and extraordinary, unforeseen and foreseen, of any kind and nature whatsoever, which at any time during the Term of this Lease may be assessed, levied, confirmed, imposed upon, or grow or become due and payable out of or in respect of, or become a lien on, the Demised Premises, or otherwise arise out of the revenues received by the Lessee from the sale or rental of the Affordable Housing Units to Sublessees, or be associated with any document (to which the Lessee is a party) creating or transferring an interest or estate in the Demised Premises. With regard to special assessments, if the right is given to pay either in one sum or in installments, Lessee may elect either mode of payment and Lessee's election ORC, LLC Amend. 1 2 shall be binding on Lessor. D. The first paragraph of Section 9.01 shall be amended to read: Section 9.01 Indemnification by Lessee. During the Term of the Lease and during the period from the Effective Date to the Commencement Date, during which Lessee shall be entitled and obligated to maintain site control of and insurance for the Demised Premises for construction of the Affordable Housing Units, Lessee will indemnify, defend and save harmless the Lessor against any and all claims, debts, demands or obligations which may be made against the Lessor or against the Lessor's title in the Demised Premises, arising out of, or in connection with, or in any way related to the Demised Premises, except to the extent such claims may be caused by the gross negligence or intentional misconduct of the Lessor (or its agents or employees in the conduct of work for or at the direction of the Lessor) with respect only to any duty or obligation Lessor expressly assumes with respect to any portion of the Demised Premises, none of which duties and obligations are so assumed herein. If it becomes necessary for the Lessor to respond to any claim, demand or unanticipated matter or to defend any action seeking to impose any such liability, the Lessee will pay the Lessor all costs of court and reasonable attorneys' fees incurred by the Lessor in effecting and preparing for such response or defense in addition to any other reasonable sums which the Lessor may be called upon to pay by reason of the entry of a judgment against the Lessor in any proceeding in which such claim is asserted. E. Section 14.01(a) shall be amended to read, effective as of the date of this Amendment NO.1: (a) Initial Lessee shall renew the building permits for the 49 Mfordable Housing Units no later than November 30, 2009. For any reason of omission by Lessee which results in the building permits not being issued by November 30, 2009, a notice of default shall be issued by Lessor to the Lessee and the Mortgagee, after which notice the Lessee and Mortgagee, individually or jointly, have sixty (60) days within which to cure the default. If the building permits have not been issued by November 30,2009, due to omission of Lessor, this Lease shall be amended a time commensurate with said omission. The Projects shall be substantially completed no later than November 30, 2010, unless there occurs a default which is cured or an extension is granted, in either case the November 30, 2010 date for substantial completion shall be extended by the amount of time of the cure or extension in the issuance of the building permits. Substantial completion shall mean either that (i) certificates of occupancy have been issued for at least 37 of the Affordable Housing Units or that the Lessee, at Lessee's expense, produces a certificate of 75% completion of the Project, which certification shall be executed by a certified professional appraiser. If the Project is not at least 75% complete at the required substantial completion date, a notice of default shall be issued by Lessor to the ORC, LLC Amend. 1 3 Lessee and the Mortgagee, after which notice the Lessee and Mortgagee, individually or jointly, have sixty (60) days within which to cure the default. In the event the Project is more than 75% complete but less than 100% completed by November 30, 2010, the Lessee shall have an additional two months, until January 31, 2011, to complete the construction of the project. Failure to have certificates of occupancy for all 49 units by January 31, 2011, unless the date is adjusted pursuant to provisions of this section, shall constitute a default, which shall require notice to the Lessee and Mortgagee with 60 days to cure the default, jointly or individually. The foregoing limitations of time for Project progression may be extended by written agreement of the Parties. F. Section 14.03 shall be amended by adding the following sentence: Economic conditions, or the state of the local, state or national economy do not constitute forced delay which requires extension for performance of any provisions of this agreement. Lessee acknowledges that in the event that hix credit financing is not obtained, other financing of the Project shall be required in order to timely complete the Project. G. Section 20.14 shall be amended by adding the following sentence: Economic conditions or the inability to obtain financing do not constitute a force majeure for which an extension is required under this paragraph. 2. All other provisions of the ground lease agreement entered the 20th day of September, 2006, not inconsistent herewith, shall remain in full force and effect. IN WITNESS WHEREOF, the Lessor and Lessee have hereunto set their hands and seal, the 15th day of April, 2009. (SEAL) DANNY L. KOLHAGE CLERK By; BOARD OF COUNTY COMMISSIONERS OF MONROE COUNTY (LESSOR) By: Deputy Clerk MAYOR GEORGE NEUGENT WITNESSES: ,?J 'J i'-J OVERSEAS REDEVELOPMENT COMPANY, LLC (LESSEE) Print Name: By: , Manager Print Name: ORC, LLC Amend. 1 4