612 aka 626 W. Parr Avenueo Wn o MEETING DATE: 03 /19/12
, ITEM NO.
j jV ' V f L 1
COUNCIL AGENDA REPORT ri
DATE: March 15, 2012
TO: MAYOR AND TOWN COUNCIL
FROM: GREG LARSON, TOWN MANAGER
SUBJECT: ADOPT A RESOLUTION FINDING THAT THE PROPERTY TRANSFER OF
612 AKA 626 W. PARR AVENUE, FROM VILLA VASONA LTD TO
HIGHLAND PROPERTY DEVELOPMENT LLC, WILL CONTINUE TO
FULFILL THE OBLIGATIONS REQUIRED UNDER PLANNED
DEVELOPMENT ORDINANCE 1698 AND AUTHORIZING THE TOWN
MANAGER TO NEGOTIATE A NEW AGREEMENT. APN 406 -28 -034.
RECOMMENDATION
Adopt the attached resolution (Attachment 7) finding that Highland Property Development is willing
and able to fulfill the obligations of the developer under the existing agreement or any amendments
thereto as required by Ordinance 1698 and authorizing the Town Manager to negotiate a new
agreement for subsequent review and action by the Town Council.
BACKGROUND
On September 28, 1983, the Town entered into an Agreement for Disposition of Property with Villa
Vasona Ltd. for the property at 612 aka 626 W. Parr Avenue (Attachment 1).
On December 1, 1986, Ordinance 1698 was adopted by the Town Council (Attachment 2).
Ordinance 1698 allowed for the construction of 107 Section 8 senior apartments, including ten units
for the physically handicapped. Ordinance 1698 contained a provision (Section V,12., E) that states:
The Developer shall not sell, assign or transfer in any manner any part or all of the site or
improvements, or bring in a new general partner, other than Jack W Sheehan, Inc. (or a co-
general partner for syndication purposes) or transfer control of Jack W. Sheehan, Inc., without
PREPARED BY : 4 Wendie R. Rooney, Director of Community Development
Reviewed by: Assistant Town Manager "V)—Town Attorney Fmance
N: \DEVTC REPORTS`2012NillaVasona.dm Refonnalled: 5,30/02 Revised: 3 /15112 1:31 PM
PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: VILLA VASONA
March 14, 2012
an express prior finding by the Town Council, after fill and fair consideration of all the facts
and circumstances, that the purchaser (or new general partner) is willing and able to fulfill the
obligations under this Agreement or any amendments thereto. This covenant shall have no effect
if the Developer's HUD - insured loan is in default or the mortgage is held orforeclosed by HUD.
On September 5, 1989, the Town entered into the First Amendment to the September 28, 1983
Agreement for Disposition of Property with Villa Vasona Ltd. (Attachment 3). This amendment was
necessary because the property was transferred from Jack W. Sheehan to PMG.
PMG is planning to transfer the property to Highland Property Development which necessitates an
amendment to the 1983 and 1989 Agreements for Disposition of Property.
DISCUSSION
The Town retained Seifel Consulting, Inc. to perform a due diligence review of the proposed transfer
to Highland Property Development LLC. Seifel conducted a thorough analysis of Highland Property
Development LLC and has found the company has both the experience and financial capacity
necessary to continue providing the housing services and meet the Town's expectations for the
affordability, upkeep, and management of the property (Attachment 6).
Staff was recently made aware of two additional requests that require further review and analysis.
These requests involve becoming a non - profit and tax exempt entity and thus removing the
requirement to pay property taxes. In addition they want to buyout the Town's option to repurchase
the property in 2054. Staff has committed to review the new property owner's requested
modifications. Following that review, a new agreement will be returned to the Town Council for
consideration and action.
FISCAL IMPACT
The existing agreement calls for a distribution of limited residual net proceeds to the Town from any
transfer of the property. It is estimated that the net General Fund benefit could be as much as
$700,000.
CONCLUSION
Based on the determination made by Seifel Consulting, Inc., staff recommends that the Council find
that Highland Property Development LLC is willing and able to fulfill the obligations of the
developer under the existing agreement and authorize the Town Manager to negotiate a new
agreement to permit the sale of the property from Villa Vasona Ltd. to Highland Property
Development LLC, with any new agreement to be brought back to Council for consideration and
action.
PAGE 3
MAYOR AND TOWN COUNCIL
SUBJECT: VILLA VASONA
March 14, 2012
Attachments:
1. Agreement for Disposition of Property entered into on September 28, 1983
2. Ordinance 1698, adopted December 1, 1986
3. First Amendment to Agreement for Disposition of Property dated September 28, 1983, entered
into on September 5, 1989
4. Letter from PMG dated December 15, 2011
5. Letter from Highland Property Development LLC dated March 9, 2012
6. Due Diligence Review from Seifel Consulting, Inc.
7. Resolution
Distribution
PMG, 22055 Clarendon Street, Suite 200, Woodland Hills, CA 91367, Attn: Robert Haskell
PMG, 22055 Clarendon Street, Suite 200, Woodland Hills, CA 91367, Attn: Bobbi Rosenquist
Highland Property Development LLC, 250 W. Colorado Boulevard, Suite 210, Arcadia, CA
91007, Attn: Paul Patierno
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ATTACHMENT I
AGRMeII47 FCR DISPOSITI(N OF "PROF=
BY THIS AGREE -OU, made and entered into this ' 28th day of .September, 1983,
by and between VnIA VASOM, LTD., a California limited partnership ( "Developer"),
and the TORN OF IDS GATOS ('Town "), it is recited and agreed as follows:
.. ITGITAIS
A. Tom and Developer have entered into a Settlement Agreement, the recitals
and tenor: of which are incorporated herein, w+.nich calls for Town to convey certain
real property to Developer pursuant to this Pgree ant and if certain conditions
in the Settlement Agreement are met.
B. The primary purpose of the Town in entering into both agreements is to
provide for the development of a Section 8 subsidized project exclusively for
senior citizens and handicapped. however, Tom further intends to ensure by all
practical means that the housing will be designed, built and maintained to Town
standards. To these ends, Ta3n is selling the subject property to Developer at
substantially less than fair market value. Developer understands these intentions
of the Town and agrees to them without reservation.
C. Villa Vasona, Ltd. partnership is presently composed of Jack W. Sheehan,
as general partner, with a 75 percent interest, and l:. M. Schaffran and Go., as
limi ted partner, with a 25 percent interest. Both parties may desire to syndicate
their interests in the partn ership.
D. Torn and Developer entered into an Pgreement for Disposition of Property
dated October l7, 198[, supplemented by First and Second AmEndments. Paragraph C
of said Agreement called for Developer to make certain covenants by appropriate
doa_ients at close of escrow. The parties have agreed that this Agreement, re-
written to include all amendments and acknowledged and recorded, is an appropriate
document for that purpose.
WIEREFORE, in consideration of the foregoing and their respective promises
herein, THE PARMS AGREE AS FOUDl S:
.. AGRERMU
A. Agreement to Sell and Desipfi tiai'of Property
Town agrees to sell to Developer, and Developer agrees to buy from Tocn,
pnsvant to the terms and conditions hereinafter set forth, the property in the
County of Santa Clara more particularly described in Eldtibit D attached hereto.
B. Purchase Price
Developer shall pay the following price for the property:
I. Fifty thousand dollars ($50,000) in cash at close of escrow on the
sale.
2. An amount equal to'ten percent (107) of the takeout loan for the
project, payable in cash at the final closing on that loan, less the payment under
Paragraph B -1.
3. If the original partners (for purposes of this Paragraph B, Jack W.
Sheehan, Jack W. Sheehan, Inc., and E. M. Schaffran & Co. shall be deemed to be the
original partners) syndicate any part of the project before six months after close
of escrow on the takeout loan, the Developer shall pay the follaaing am nts, or
the payment called for in Paragraph B -2, whichever is greater:
a. Fifty percent (507) of the proceeds of the syndication , less the
payment under B -1, payable in cash upon receipt by the original pa with syn-
dication proceeds defined as follows: The amounts paid by additional partners for
their interests in the partnership, less any fees and expenses of syndication; pro-
vided, that the Developer shall not charge any syndication fees. -
b. en emo nt equal to the percentage of the project not syndicated
rime ten percent (107) of the takeout loan.
4. If any of the original partners syndicate any part of the project
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subse to the six-month period, that partner shall pay to the Tan fifty per-
cent OTT) of the net proceeds of that syndication, as defined in Paragraph B -3 -a,
less the m inim n payment already made under Paragraph B-3 -b or Paragraph B -2
with respect to the portion of the project than being syndicated.
5. If the Developer refinances the project, an additional payment
equal to fifty percent (507) of the net proceeds of the refinan received by
the original partners and not reinvested in the project, less the net coital
contributions of the original panthers.
6. if the Developer eventually sells the project, an additional payment
equal to fifty percent (507) of the net proceeds to the original partners from that
sale, with net proceeds defined as follows: The payments received by the original
partners as a result of the sale after payment of all bona fide loans, less the
net capital contributions of the original partners. (Annants allowed as return
on equity under Section 8 or its equ ivalent shall not be treated as return of -
capital.)
7. In lieu of the payments under Paragraphs B -2 through B -6, the
Developer may pay $1,030,477 in cash at the final closing on the takeout loan for
the project, less the payment under Paragraph B -1.
C. Covenants
By appropriate documents at close of escrow, Developer shall covenant,
on behalf of itself and its successors, to do the following:
1. Restrict the use of the site to housing for elderly or handicapped
persons e ligib le for Section 8 subsidies during the period when Section 8 subsidies
are available to the project (or to persons eligible far subsidy available to the
project under any successor law to Section 8) and, thereafter, restrict the use of
the property to housing for elderly or handicapped persons of low and moderate in-
come, as defined in HUD regulations.
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2. Adhere, m initial and subsequent lettings, to the Occupancy Preference
System established by the Tom, attached hereto as Exhibit A, as supplemented by the
Affirmative Fair Marketing Plan established by the Twn (also attached hereto as
Exhibit A). At such time as the project is no longer receiving any federal subsidy,
the Town may modify its occupancy preference in any miner that will not jeopardize
the Developer's interests.
3. Maintain the housing emits to be crostructed on the Site in accord-
ance with the maintenance standards established by the Torn, attached hereto as
tYd'} B. Torun personnel will make periodic inspections. The parties may revise
such standards by mutual consent if necessity requires it.
4. Adopt and maintain the nos Gatos management policies set forth in
Exhibit C attached hereto, together with other management policies which ensure
that tenants are not allowed to violate any Twin ordinances or in any manner cause
a disturbance to neighbors of the project. the parties may revise such standards
by mutual consent if necessity re it. -
5. Not sell, assign or transfer in any manner any part or all of the
Site or improvements, or
bring in a new general partner, other than Jack W.
S<'neehan, Inc. (or a co-general pawner for syndication purposes), without an ex-
press prior finding by the Tbn Council, after full and fair consideration of all
the facts and circumstances, that the purchaser (or new general partner) is willing
and able to fulfill all the obligations of the Developer tmder this Agreement or
any amendments thereto. This covenant shall have no effect if the Developer's HOD -
insured loan is in default or the mortgage is held or foreclosed by MD.
6. Maintain the premises in private ownership, subject to ad valorem
taxation. -
7. Place no new encumbrances an the Site at any time after 45 years
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from close of escrow, nor bosom against the property many existing encumbrances
after said date, without the 6Titten approval of the Town.
8. Reconvey the Site to the Tom, at the Tom's option, to be exer-
cised as stated herein, sixty -five (65) years from the date of close of escrow on
tte takeout loan for the project, for the aom of One Dolls ($1.00) plus all trans-
fer costs. Said conveyance shall include any and all improvecients then existing on
the Site, free of all encumbrances, but subject to all obligations arising from
operation of the project except those personal injury and property damage obliga-
tions not covered by insurance.
D. Contingencies
The Developer's obligation to purchase the property is subject to the
following contingencies:
1. Zoning approval satisfactory to the Town and Developer, as evidenced
by Developer's execution of the release called for in Paragraph 4.of the Settlement
Pgrees:nt between the parties.
2. Subdivision of the Project Site at Town expense.
J. Issuance to Developer, at Developer's expense, of all permits and
approvals required to be obtained from g overnmen tal and regulatory agencies for
development of the Site. Developer agrees to use his best eftorts to obtain all
such permits and approvals as rapidly as feasible after the execution of this
P.greerent, and to notify the 'run in writing as soon as each permit or approval is
obtained.
4. The obtaining of construction and permanent financing satisfactory
to the Developer. If the Developer is unable to find satisfactory financing, it
shall not attempt to transfer its reservation of Section 8 subsidies to another
project; provided that if the Developer finds financing which is satisfactory to
it but not acceptable to the Tom, this restriction an transfer shall not apply.
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E. Escrow and Title
1. The Developer shall choose an escrow ccapany at which an escrow
shall be opened. - -
2. Escrow shall close within 120 days after the release referred to in
Paragraph 4 of the Setti®ent'Ag'reeoart has been delivered to the Ton, except
that the closing date may be extended by written consent of the parties for good .
caus shown. The p arties sal deliver signed instructions to the escrow holder
within sufficient time to allow closing within the designated time period. Time-
is of the essence in this Agreement. All modifications or extensions shall be in
writing signed by both parties. Any extensions will not be construed to be a
waiver of the "time is of the essence" clause.
3. Ali escrow fees, title insurance costs, and other closing costs
shall be paid by Developer.
4. All assessments and the costs of any off -site inprovemesnts shall be
paid by the Town.
5. The Torn shall furnish Developer at Developer's expense a standard
California Land Title Association Policy showing title vested in the Developer
subject only to the following:
a. Easements or rights of way for public or quasi -public utility
or public street purposes, if any.
b. The covenants in Paragraph C hereof.
F. Possession
Developer shall be entitled to possession of the Site at close of escrow.
However, commencing with execution of this Agreement, Developer shall have a lima ted
right of entry, subject to Torn permits, on th Site for the purpose of locating
construction trailers (me or more of which will contain a construction office),
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raking surveys, conducting inspections by consultants and performing similar
functions which mast be completed prior to commenonent of construction, provided
that prior to exercising such rights of entry, Developer shall amply with the
insurance requirements of Paragraph H -7 hereof.
G. Default in Purchase
1. If Developer fails to complete this purchase by reason of any de-
fault of Developer, the Ton shall be released from its obligation to sell the
property to Developer.
2. Developer recognizes that the Torn has spent considerable time,
effort and marey acquiring the Site, preparing it for development, and ensuring
that the project will qualify for financing; that the Town has chosen Developer
over other potential developers in reliance on Developer's commitment to complete
the project; aid that it is extremely difficult and impractical to determine the
exact damages that the Town would suffer in the event of a default by Developer.
Accordingly, the parties agree that if Developer defaults in closing escrow as
stated above in Paragraph E -2, the Town shall be entitled to $100,000 as liquidated
damages, in lieu of wry other relief to w}d.ch the Town might otherwise be entitled
by virtue of this contract or operation of the law. k7he parties hereby specifically
agree to the foregoing provision as follows:
Dated: 9�s /mss
o ,
Twn Developer
3. if Town fails to deliver title or t other obligations as prescribed
in Paragraph C above, Developer may t erminat e this Agreement. Specifically, the
Tan shall have no liability hereunder if any portion of the project is defeated
by reference or initiative.
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H. Development
1. Commencing Promptly upon close of escrow, Developer shall, dili-
gently develop the Site in accordance with the requir ements of the PD Zone. Con-
struction shall be completed within eighteen (18) months after close of escrow.
less an extension is approved by the Town Council; which approval shall not be with-
held unreasonably. Occupancy permits shall be issued in accordance with Tvan policy.
2. Developer shall assume and discharge all dnti.es and obligations speci-
fied in the construction contract, including without limitation the payment of any
sums of money thereunder. Moreover, Developer agrees to indemnify and hold and
save Tocam free and harmless from and against any and all claims, demands, liens,
judgments and attorneys' fees arising from and amt of the construction contract.
3. Developer shall promptly cause to be paid or shall promptly pay any
on -site expenses (except for such expenses as may be incurred in ca mection with
the improvements and services to be provided by the Tour pursuant to this Agree -
uent) together with any direct and indirect job costs associated with or related
to the development of the Site and all valid bills and changes for maternal, labor
or other costs in connection with or arising out of the construction of the project.
Developer further agrees to indemnify and hold and save Ton free and harmless from
and against any and all claims, demands, liens, judgments and attorneys' fees
arising after the date on which Developer takes possession of the Site from and
out of development of the Site and construction of the project.
4. Developer shall indemnify, save harmless and defend Tom from all
liability, losses, d amage s, costs, expenses (including attorneys' fees), causes
of action, claims and judgments arising out of any injury or death to any person
or persons (including employees of Developer and Developer's affiliat general
contractor) or damage to the property of any person or persons of any kind and to
whomsoever belonging from any cause whatsoever in, upon or in any way connected
2-L
with the Site or the sidewalks, streets, alleys, parking lots and premises adjacent
thereto, or the use or occupancy thereof during Developer's possessim .thereof,
and shall reimburse Town for any attorneys'. fees and expenses incurred in connec-
tion with any such claim. Nothing herein should be construed to re Developer
to indemify Town to any extent for d arising solely out of the acts or
omissiaas of Town, its agents or servaits,
5. Tom shall indemnify, save harmless and defend Developer fray all
liability, losses, damages, costs, expenses (including attorneys' fees), causes
of action, claims and judgments arising out of any injury or death to any person
or persons (including employees of Ton aid Ton's affiliated general contractor)
or damage to the property of any person or persons of any kind and to uhamsoever
belanging from any cause chatsoever in, upon or in any way corrected with the Site
or the sidewalks, streets, alleys, parking lots and premises adjacent thereto, or
the use or occupancy thereof during Tam's possession thereof, and shall reimburse
Developer for any attorneys' fees and expenses incurred in connection with any
such claim Nothing herein should be construed to require Town to inammSy
Developer to any extent for -damages arising solely cut of the acts or omissions
of Developer, its agents or servants.
6. Developer shall acquire, carry and maintain during the term of
development, without expense to Torn, insurance in the name of Developer (and
naming Town as an additional insured) against any liability to the public resulting
from any occurrence in or about the property in an amount not less than Five Hun-
dred Thousand Dollars ($500,000) per person and One Million Dollars ($1,000,000)
per occurrence to indemnify against the claim or claims for injury to or death of
one or more persons, and not less than One Hundred Thousand Dollars ($100,000) for
damage to property. Developer shall at its sole expense, acquire, - cant' and main-
6D
tain in full force acid effect throughout the term of development, with insurance
companies licensed to do.business in the State of California, fire insurance with
broad form coverage covering the project and naming Developer and Ton as insured.
Such insurance shall be in the face amount equal to the full insurable valve of
the project excl foundations and excavating costs. All policies shall pro-
vide that they cannot be cancelled without thirty (3U) days' notice to the Tam.
7. Tam shall n ame Developer as an additional insured under Tan's
liability policies.
I. Accounting
Within ninety (90) days of completion of construction, Developer shall
present the Tam with an accounting of his total cash investment in the project.
The cash investment shall be co as follows:
I. Original cash invested by partners from May, 198U.
2. Any fees or expenses contributed by the General Partner that are in-
cludable for cost certification and do represent investment equity, such as gui-Ider,
Sponsor profit and Risk Allowance. Within ninety (90) days of the submittal, the
Tan may investigate the accenting to the extent it is necessary at the Tam's
expense. if the Tam disagrees with the accenting presented, good faith negotia-
tions shall be conducted with the Developer. if the Ton and Developer are unable
to reach agreement, the cash investment hereunder shall be determined by arbitration
in accordance with the rules of the American Arbitration Association, and judgment
may be entered on any award. Once a determination of cash investment has been made,
it shall not be increased or decreased ther
J. Operation .
1. Upon completion of construction, Developer shall rent, maintain,
manage, and otherwise operate the units in accordance with the covenants set forth
in Paragraph C hereof, and shall pay all debts secured by the property.
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2. Developer shall at all times maintain sufficient insurance to pro-
tect the interests of the Tour, including but not limited to sufficient coverage
for one hundred percent (1007) reconstruction of the premises to Town standards in
the evert of fire or other casualty, including an earthqualre, unless the cost would
be ureasanable, and shall nor the Town as an additional insured. Developer shall
report annually to the Town an the insurance maintained. L as a result of any such
annual report the Town Council concludes that the insurance is not sufficient to
protect the interests of the Town, it shall conduct good faith negotiations with the
ieveloper for an increase in the insurance to a level which is sufficient. If the
Tour and the Developer are unable to reach agreement, the amount of insrane which
is sufficient shall be determined by arbitration in accordance with the rules of
the American Arbitration Association and jucgraut may be entered on any award.
3. If the premises are destroyed by accident or any otter casualty (ex-
cept earthquake if insurance is not available at a reasonable price), Developer
shall promptly rebuild and continue its obligations under this Agreement.
K. Default in Development or Operation
1. In the event Developer defaults in its obligations under Sections
H ar J aid fails to remedy said default within ninety (90) days after receipt of
written notice from the Town of such default, the Torah shall have the power to
declare a termination of all right, title, and interest of the Developer in the
Site conveyed to the Developer hereunder and all improvenents constructed thereon,
and such Site and improvements shall revert to the Town; provided, that such con-
dition subsequent and revesting of title shall not affect the following:
a. The lien of any deed of test executed to obtain the construction
loam and long -tern mortgage finan for the project._ However, the reverting of
title in the Town shall take precedence ever any other deeds of trust unless such
deeds cf trust are approved in advance by resolution of the Town Council.
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b. Any lease or rental agreemmrt between the Developer and any low -
or moderate - income . tenant.
The Tmn shall have the right to institute such actions or pro-
ceedings as it may deem desirable for effectuating the purpose of this section,
including out not limited to the right to execute and record with the Recorder of
the County of Santa Clara a written declaration of the termination of all right
and title of the Developer as set forth above. Any delay by the Tarn in taking
such action shall not operate as a waiver of its rights, it being the intent of
this provision that the Town shall not be constrained, so as to avoid the risk
of being deprived of or ].uni in the exercise of the remedy provided in this
paragraph because of concepts of waiver, lathes or otherwise.
If the Town exercises its power of termination upon conditions
subsequent, as set forth in the preceding paragraph, within forty -five (45) yeas
after close of escrow, the Town shall, in order to avoid a forfeiture or undue .
hardship to Developer, pay to Developer, within me hundred twenty (120) days
following the date of revesting of title in the Town, an amount equal to the actual
cash (not borrowed) invested by the Developer in purchasing the Site and making
improvments thereon, as determined under Paragraph I. If the Tom exercises its
power of termination beyond said time, the Developer shall receive no payment.
2. Notwithstanding any other provision of this Agreement, if the project
is crostructed /developed with the proceeds of an FHA- insured mortgage (which term
includes a "deed of trust ") or tax -ex®pt bonds, then (a) so long as the mortgage
is insured or held by the Secretary of END or by the issuers of the bands or the
trustee for the bondholders, or (b) if the project is to be foreclosed by the
Secretary, the trustee or the issuer of the bonds and one of then canes into owner-
ship by such foreclosure, or deed in lieu thereof, none of the provisions of this
-iz-
Agreement relating to reversims, penalties, foreclosures, defaults, restrictions
and matters set forth in the covenants in the covenants in Section C herein,
shall apply to or restrict the Secretary, the trustee or the iss in the exer-
cise of their rig.'nts and responsibilities under the insured mortgage, the National
Housing Act, and the regulations issued pursuant thereto or with regard to the
tax-exempt financing.
L. Option to Repurchase
Sixty -five (65) years from the date of close of escrow under this Agree_
mart, Developer shall reconvey the Site to the Town, at the Town's option (to be
exercised as stated below), for the sum of One Dollar ($1.00), by good end suffi-
cient grant deed, with the Town paying all transfer costs. Said conveyance shall
include any and all improvements and fixtures then existing on the Site, free of
all encuEbrences, but subject to all obligations arising from the operation of the
project except those personal injury and property damage obligations not covered
by insurance. No improvements or fixtures installed on the premises at any time
during the sixty-five (65) years may be removed by Developer (except for replace-
ment purposes) without the written consent of the Torn.
M. Miscellaneous
1. It is intended and agreed, and the deed to expressly provide, that
the agreements and covenants made by the Developer in this Agreement shall be cove-
nants running with the land and that they shall, in any event, and without regard
to technical classification or designation, legal or otherwise, and except only
as otherwise specifically provided in this Agreement itself, be, to the fullest
extent permitted by law and equity, binding far the benefit and in favor of, and
enforceable by, the To +n, its successors and assigns, against the Site or any part
thereof. The covenants shall therefore expressly benefit the property on which
"t
Town Hall is located, or such other Town -caned property as the Council may from
time to time designate.
2. Promptly at the request of Developer, its successors and assigns,
the Twat shall issue a recordable certificate st if it be true, that there
is no default by the Developer or its successors and assigns in the performance
of its agreements and covenants under this Agreement.
3. None of the provisions of this Agreement are intended to or shall be
m by reason of any deed transferring title to the Site from the Town to the
Developer or any successor in interest, and any such deed shall not be deemed to
affect or impair the provisions and covenants of this Agreement.
4. A notice of caminication under this Agreement by either party to
the other shall be sufficiently given or delivered if dispatched by registered
mail, postage prepaid, addressed to the following address or to such other address
as may have been furnished by either party to the other party. .
Town
Developer
Tom P 0. Manager 949 3154 Windsor court
Los Gatos, C4 95031 - Lafayette, CA 94549
5. In the event of a breach or a threatened breach of this Agreement,
either party at its option shall be entitled to an injunction restra the patty
or parties about to commit any breach of this Agreement or who have committed a
breach thereof, without showing or proving any actual damage sustained by such party.
6. If either party shall fail or refuse to perform stipulations hereof
on their part, then the other party at its option may, by suit, enforce specific
Perfonmince by the defaulting Party, the execution of a deed as herein provided,
and performance of any other act hereby required of the defaulting party and /or
may recover from such defaulting party'Jmtever damages may be provided by law or
this Agreement.
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7. In the event of litigation between the parties over my aspect of
this Agreelmnt, the prevailing pasty shall be entitled to all reasonable costs of
litigation (not limited to those allo,ed by statute), as well as reasonable attor-
neys' fees.
V 17TA VASONA, LTD.
By
(Seal)
T own Clem
c
(Attach aclauoaledpent, so document can be recorded.)
Stateol (4wrGAWA On this the3d SEV a�2 $
1 ) day of 19 _, before me,
County of Sa,✓ FCA.c'raa 1 — 1 ) 120 , v
the undersigned Notary Public, personally appeared
0 Personally known tome
OFFICIAL SERI, 0 Proved tome on the basis of satisfactory evidence
C. DIZON to be the persons) who executed the within Instrument on behalf of the
NOTARY PIISUC - CALIFORNIA partnership, and acknowledged to me that the partnership executed It.
Gtr C n COUN 14 1 1 .tN 16. FRA
19 %ll WITNESS my hand and official al.
MY ddmnl &prer Ix 1D, 19e] �
Notary's wgnanure -
.x 'c deugd arx,
ORDINANCE NO. 1698
AN ORDINANCE OF THE TOWN OF LOS GATOS
AMENDING ORDINANCE 1572
WHICH AMENDED THE ZONING ORDINANCE EFFECTING
ZONE CHANGE NO. 52 FROM 0 AND RM:5 -12 TO R- 1:8,000 -PD
THE TOWN COUNCIL OF THE TOWN OF LOS GATOS ORDAINS:
SECTION I.
The Zoning Ordinance of the Town of Los Gatos is hereby amended to change
the zoning of the property at 612 West Parr Avenue shown on the map which is
attached hereto, marked Exhibit A and is a part of this ordinance, from RM:5 -12
(Multiple Family Residential, 5 -12 dwelling units per net acre and 0 (Office)
to R- 1:8 -PD (Single Family Residential, 8,000 square foot minimum lot
size - Planned Development).
SECTION II.
The PO (Planned Development Overlay) zone established by this ordinance
authorizes the following construction and use of improvements:
1. Construction of one hundred and seven (107) apartments to be used by
senior citizens, including 10 units designed for the physically
handicapped.
2. Parking (including a minimum of four handicapped spaces), landscaping
and other improvements shown and required on the Official Development
Plan.
3. Uses permitted are those specified in the R -1:8 (Single Family
Residential) zone by Sections 4.26.020 (Permitted Uses) and 4.26.030
(Conditional Uses) of the Zoning Ordinance, as those sections exist at
the time of the adoption of this ordinance, or as they may be amended
in the future. However, no use listed in Section 4.26.030 is allowed
unless specifically authorized by this ordinance, or by conditional use
permit.
SECTION III
COMPLIANCE WITH OTHER DEVELOPMENT STANDARDS
All general provisions in Article 3 of the Zoning Ordinance apply, and the
provisions of Chapter 4.10 of the Zoning Ordinance apply except when the
Official Development Plan specifically shows otherwise.
SECTION IV
Architecture and Site Approval is required before any grading or
construction work is performed, whether or not a permit is required for the
work, and before any permit for grading or construction is issued. Grading or
construction permits shall only be used in a manner complying with Section
4.82.120 of the Zoning Ordinance.
SECTION V
OFFICIAL DEVELOPMENT PLAN
In addition to Exhibit A (Zone Change Vicinity Map), the attached Exhibit 8
(Site Plan), Exhibit C, D, E, F (Floor Plans), Exhibit G (Elevations), Exhibit
H (topographic survey), and Exhibit I (Tentative Parcel Map) are part of the
Official Development plan. The following performance standards are part of the
Official Development Plan and must be complied with before issuance of any
grading or construction permits:
1. The applicant shall file a parcel map to the satisfaction of the Town
Engineer showing the final configuration of the project site and the
remainder of the County parcel.
2. The applicant shall submit grading, drainage, on -site lighting, on -site
parking, and storm and sanitary sewer plans to the satisfaction of the Town
Engineer.
3. No grading shall occur within 6 feet beyond the driplines of mature trees,
and no paving shall be placed within a 6 foot radius of the base of these
trees.
- 2 -
4. Hand trenching will be required if any utility lines are to be placed
within the root zones of any mature trees, to the satisfaction of the
Superintendent of Parks and Forestry.
5. Existing trees shown to remain shall be surrounded with protective fencing
along the driplines during grading and construction, to the satisfaction of
the Superintendent of Parks and Forestry.
6. If permitted by HUD financing, each unit shall be served with an active
solar hot water system from the start.
7. No gates or other obstructions shall be built across any portion of any
access road.
8. Residence in this project shall be restricted to persons who are senior
citizens as defined by Zoning Ordinance Section 2.00.420, except that
handicapped residents need not be senior citizens.
9. The handicapped parking measurements shall be updated to be accurate.
10. All units must be handicapped adaptable as defined by the State Housing and
Community Development Adaptability /Accessibility Regulations dated December
10, 1982 or the Housing Adaptability Guidelines by Peoples Housing Inc.
1980, except where the standards would create an unreasonable hardship.
11. Floor plans, including the recreation building, landscaping and other
amenities; shall be reviewed and may be modified by the Deciding Body at
the time of Architecture and Site approval.
12. Covenants
By appropriate documents at close of escrow, developer shall covenant, on
behalf of itself and its successors, to do the following:
A. Restrict the use of the site to housing for elderly persons eligible
for Section 8 subsidies during the period when Section 8 subsidies are
available to the project (or to persons eligible for subsidy available
to the project under any successor law to Section 8) and, thereafter,
restrict the use of the property to housing for elderly persons of low
and moderate income as defined in HUD regulations.
B. Adhere, on initial and subsequent lettings, to the Occupancy Preference
System as supplemented by the Affirmative Fair Marketing Plan, both of
which have been established by the Town. At such time as the project
is no longer receiving any federal subsidy, the Town may modify its
occupancy preference in any manner that will not jeopardize the
developer's interests.
- 3 -
C. Maintain the housing units to be constructed on the site in accordance
with the maintenance standards established by the Town. Town personnel
will make periodic inspections. The parties may revise such standards
by mutual consent if necessity requires it.
D. Adopt and maintain the Los Gatos management policies together with
other management policies which ensure that tenants are not allowed to
violate any Town ordinances or in any manner cause a disturbance to
neighbors of the project. The parties may revise such standards by
mutual consent if necessity requires it.
E. Not sell, assign or transfer in any manner any part or all of the site
or improvements, or bring in a new general partner, other than Jack W.
Sheehan, Inc. (or a co- general partner for syndication purposes) or
transfer control of Jack W. Sheehan, Inc., without an express prior
finding by the Town Council, after full and fair consideration of all
the facts and circumstances, that the purchase (or new general partner)
is willing and able to fulfill all the obligations of the developer
under this Agreement or any amendments thereto. This covenant shall
have no effect if the Developer's HUD - insured loan is in default or the
mortgage is held or foreclosed by HUD.
F. Maintain the premises in private ownership, subject to ad valorem
taxation.
G. Place no new encumbrances on the site at any time after 45 years from
close of escrow, nor borrow against the property on any existing
encumbrances after said date, without the written approval of the Town.
H. Reconvey the site to the Town, at the Town's option, to be exercised as
stated herein, sixty -five (65) years from the date of close of escrow
on the take -out loan for the project, for the sum of One Dollar ($1.00)
plus all transfer costs. Said conveyance shall include any and all
improvements then existing on the site, free of all encumbrances, but
subject to all obligations arising from operation of the project except
those personal injury and property damage obligations not covered by
insurance.
13. If at any time within the first five years after initial occupancy,
additional parking is shown to be necessary, it shall be provided by the
property owner subject to Architecture and Site approval.
14. The parking spaces in the southernmost parking area shall be paved with
"turf block ".
- 4 -
SECTION VI
This ordinance amends Ordinance No. 1572.
SECTION VII
This ordinance takes effect 30 days after the date it is adopted. Within
15 days after this ordinance is adopted the Town Clerk shall cause it to be
published once in a newspaper of general circulation published and circulated
in the Town.
This ordinance was introduced at a regular
meeting of the Town Council of the Town of Los Gatos on November 3rd 1986
and adopted by the following vote as an ordinance of the Town of Los Gatos at a
regular meeting of the Town Council on December 1st , 1986.
AYES: COUNCIL MEMBERS Joanne Benjamin, Eric D. Carlson, Thomas J.
Ferrito, Robert L. Hamilton, and Mayor Brent N. Ventura
NOES: COUNCIL MEMBERS None
ABSTAIN: COUNCIL MEMBERS
ABSENT: COUNCIL MEMBERS
"Done
None
SIGNED: /s/ Brent N. Ventura
WOR OF FRE iOWN U
ATTEST:
/s/ Rose E. Aldag (seal)
CLERK F THE TOWWZF
PLNOI:ORD:VILLA
P
- 5 -
IL
40 tca4z
W]' ) -' LOS GAW�8
,\ iV
Application No.— 7- -5Z -5 _. Change of zoning map
amending 'the Town Zoning Ordinance.
?� Zone Change from o t to �Z- I:rZcoo -pr�)
Prezonina to
4Pmrva o by Plan.
Approved by Town C
Town Clerk t
Commission
date ,.JA "Ky n,1az
it date
'_ — Mayor
i
�;:,s 102%2613
�L 10 FOP. WORD
RECORDING REQUESTED BY:'" OUM OF
TOWN OF LOS GATOS 1'}_'1
WHEN RECORDED MAIL TO: .a SE 2 9 IT 43 Ph T
Town Clerk 66AD
Town of Los Gatos SANTA U01 tdgh,�Y
P.O. Box 949 LALIK10QANE
RED DER
DER
Los Gatos, California 95030
NO FEE - Gov. Code Sec. 6103
FIRST AMENDMENT TO
AGREEMENT FOR DISPOSITION OF REAL PROPERTY
BETWEEN TOWN OF LOS GATOS AND VILLA VASONA LTD
DATED SEPTEMBER 28 1983
By this agreement, made and entered into this 5th day of September 1989,
the Town of Los Gatos ( "Town ") and Villa Vasona, Ltd. ( "Developer') hereby amend
their Agreement for Disposition of Proper(v Dated September 28 1983
1. Section B.3. is amended to add: It is agreed that pursuant to Section B.1., B.2.
and B.3., the amount due from Developer to the Town as of the date of this
Second Amendment is as follows:
Computation of amount due -
50% of syndication proceeds - B.3.a.
$318,000.00
74% syndicated (50 % x $636,000)
Unsyndicated portion - B.3.b.
26% x 10% x $4,116,000
107,016.
Sub -total
425 01 . 0
Syndicated interest owed
49,384.76
Unsyndicated interest owed
39,125.85
Total amount due
513.526.61
Payments made to date -
-
Close of escrow (Sept., 1983)
50,000.00
Payment at Final Closing (April, 1985)
- syndicated (74 %)
23,000.00
- unsyndicated (1 %)
4,116.00
_ Payment (December 22, 1988)
%000.00
.00
Total payments received 127,116.00
Net amount owed 386410.61
Interest payment due September 1, 1989 49,384.76
Net loan amount 337.025.85
ATFAkCHzME;NT 3
The net amount owing September 1, 1989 of 5337,025.6 shall be paid in annual
payments of $33,346.74 commencing September 1, 1989. Although Developer
anticipates the payments to be funded from Villa Vasona project Surplus Cash,
Developer will cause the 533,346.74 payment to be made to the Town by
September 1, 1989 and by September 1 of each subsequent year, whether or not
there is sufficient Villa Vasona project Surplus Cash.
The interest rate is the Town's average annualized investment rate from
September 28, 1983 to present which equals 8.75 %.
Interest on the 5337,025.85 shall commence with the payment due dates of the
original syndication. Therefore, interest due December, 1988 is accrued based on
the schedule included as Attachment A.
All interest due as of December 1988, for the interest from the syndication will
be paid to the Town with the first installment payment due September 1, 1989.
Therefore, the first annual payment will include a principal payment of $33,346.74
plus an additional payment of $49,384.76 for interest accrued to date, for a total
of $82,731.50.
All subsequent annual payments will be based on the schedule attached as
Attachment B. The annual payment will be pro -rated between principal and
interest based on interest of 8.75% compounded annually.
In the event of the sale, transfer, assignment, voluntarily or involuntarily, in whole
or in part, of all or any portion of the Villa Vasona project, or the assignment or
transfer of any interest of a partner whether a general or a limited partner, in the
project, all outstanding principal and interest due under this section shall
immediately become due and payable.
2. Pursuant to Section C.5., the Town accepts the removal of Jack W. Sheehan as
General Partner and the appointment of PMG, Incorporated, as a new general
partner.
3. Section C.7. is amended in its entirety to read: With the written approval of the
Town (a) Developer may refinance any outstanding mortgage on the property or
(b) upon payment of all amounts due Town pursuant to Section B. as set forth
in Attachment B hereto or sooner at Developer's option, and payment of all
amounts due on the currently outstanding first mortgage on the property,
Developer may place new encumbrances on the property. Pursuant to (a) and (b)
above, however, no new encumbrances may be placed on the site at any time
after forty -five (45) years from the date of this amended agreement.
2
4•
Section C.8. is amended in its entirety to read: Reconvey the site to the Town
at the Townts option, to be exercised as stated herein sixty-five (65) years from
the date of this amended agreement for the sum of one dollar ($1.00) plus all
transfer costs. Said conveyance shall include any and all improvements then
existing on the site, free of all encumbrances, but subject to all obligations arising
from operation of the project except those personal injury and property damage
obligations not covered by insurance.
The Town and Developer agree for the purposes of Section I., Accounting, the
total cash investment in Villa Vasona is $1,594,787.
6. Section L. shall be amended in its entirety to read: Sixty-five (65) years from the
date of this First Amendment, Developer shall reconvey the site to the Town, at
the Town's option (to be exercised as stated below), for the sum of one dollar
($1.00), by good and sufficient grant deed, with the Town paying all transfer costs.
Said conveyance shall include any and all improvements and fixtures then existing
on the site, free of all encumbrances, but subject to all obligations arising from
the operation of the project except those personal injury and property damage
obligations not covered by insurance. No improvements or fixtures installed on
the premises at any time during the sixty -five (65) years may be removed by
Developer (except for replacement purposes) without the written consent of the
Town.
7. Section M.4. is amended to change the address for notice to Developer to:
Villa Vasona, Ltd.
c/o PMG
5855 Topanga Canyon Boulevard, Suite 300
Woodland Hills, CA 91367
8. The Town and Developer agree to a Conditional Assimiment of Partnership
Interests dated SentembPS 5, 1989 for Security on the outstanding balance of
$337,025.85 owing to Town.
9. Except as specifically amended herein, all other terms and conditions of said
Agreement for Disposition of Property dated September 28, 1983, shall remain in
force and effect.
10. Section M.8 shall be added to read as follows: E. Reports required to be filed
with the U.S. Department of Housing Urban Development shall be filed
concurrently with the Town.
Villa Vasona, Ltd.
By: PMG9K. Inc
iharies a der
By:
unn
President
Town of Los Gatos
B ,--
oanne Benjamin
Mayor
STATE OF CALIFORNIA
ss:
COUNTY OF SANTA CLARA)
On this day oAeg;orf the year 19f, before me, Marian V.
Cosgrove, Town Clerk for Los Gatos, personally appeared Joanne Benjamin,
personally ]mown to me to be the persons who executed this instrument as Mayor of
the Town of Los Gatos, and acknowledged to me that the Town of Los Gatos executed
it.
Marian V. Cosgrov Town Clerk
Town of Los Gato
Approved as to Form:
By:
Ma Jo r ger, Attorney
mP0:_ A: \miu�yilla.vs Aug s 29, 1989
1
i
)RATE ACKNOWLEDGMENT
6
NO. 202
:e of California
:ntyof
Los Angeles SS.
)))
OR40AL r
Y
etim - won' R&AC- Covanoo
r — LOS ANGa E CoLNliY
my ca mAlAnn Excta
.xne 29,1993
Onthisthe 2 dayof August 19d9, before me,
Bobbi Elster— Rosenquist
the undersigned Notary Public, personally appeared
Charles K. Gunn
1t personally known to me
El proved to me on the basis of satisfactory evidence
to be the persons) who executed the within Instrument as
President or on behalf of the corporation therein
named, and acknowledged to me that the corporation executed It.
WITNESS � myhand and official s eal. y
� � vVl. C -til �✓ � f117.�P/1f tw.LS 1
Notary's Signature
NATIONAL NOTARY ASSOCIATION • 23012 V.Mum 5N . • P.C. Box 6625 • VlO find Hift CA 91365b625
I
l
t; ATTACHMENT A --
VILLA VASONA
INTEREST
CALCULATION
SYNDICATED
principal
Interest
Nov-86
87,500.00
7,658.25
Nov -87
14-5,000.00
12,687.50
Nov -88
182,500.00
15,988.75
Dec/22/88
245,000.00
1,292.12
principal payment 12/22/88
- 50,000.00
interest 12.23 -88 to 3 -31 -89
4,627.91
calculated on
195,000.00
Interest 4-1 -89 to 630.89
4,253.94
calculated on
195,000.00
Interest 7 -1 -89 to 8 -31 -89
2,898.29
calculated on
195,000.00
UNSYNDICATED
principal
interest
107,016.00
- 4,116.00
balance due
102,900.00
Apr -86
102,900.00
9,003.75
Apr -87
102,900.00
9,003.75
Apr -88
102,900.00
9,003.75
Apr-89
102,900.00
9,D03.75
'May -Aug 89
102.900.D0
3,110.85
TOTAL INTEREST OWED
88.510.61
INTEREST DUE 9/1/89 49,384.76
INTEREST INCLUDED IN LOAN 39,125.85
TOTAL INTEREST OWED 88.510.61
ATTACHMENT •::'��
337,025.
I
�.! roared
I
j
me
1 05%
!
1
term n)
20
I
P.Ym ent
]3746.76
1
I
I
I
paym ent
paymenrl
nnci
intcmtl
balantt
1
beg bal
1 3]7,025.85
!
I I
73346.74
73346.74
0.00
303.679.111
1
1
2
]3,346.74
6,714.82
26571.92
296.904.291
3
1 371/6.741
7,367.611
25,979.131
289536.671
I 4
33116.741
8.01218
25334.461
?8152439
I
I
5
1 77,746.74
8.71336
24,63738; 272.811.04
6
1 33.376.741
9.475.71
23.8 M.971
263335.26
1
I
7
1 33.346.
10,304.90
237041.87
253.030.36
8
1 33,346.741
11,20658
22,140.161
241.823.771
I
1
9
1 33,'46.74
12,187.16
21,15958
?29,636.611
I
10
l 33.346.74
13.7.53.541
20.09]10
216383.08
1
-
ll
I 33.346.74
14.413.22
18.933321
201,969.86
1 12
33-U6.74
74
7 7.672-W 17,67236
186295.48
1 I
I 13
33.116.74
17,045.89
16-MOMI
169.249.591
I
14
33-U6.741
18537.401
14.809.34
150,712.191
I
1
IS
33.346.741
20.159.421
13,187.321
13055277!
I
1
1 16
33.346.74
21,973371
11.473.37
108,629.40
1
I
1 17
33,346.74
23,641.67
9305.07
81,787.73
( 1
11
]3,116.741
1.927.81
7,418.931
58.859.92'
1
t9
33346.74
28,19650
5.00.241
30.663.42
1
f
20
1 33-
30,663.42
1683.051
0.001
I I
I
I
I
I I
I
totals
1 666,934531
337,025.95
329,908.68
I
1
I
I
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I
I
I
I
I
I
I
I
I
I
I
i I I
1
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I I
This Page
Intentionally
Left Blank
PM
December 15, 2011
Greg Larson
Town Manager
Town of Los Gatos
Town Hall
110 E. Main Street
Los Gatos, CA 95030
Sandy Baily
Planning Manager
Town of Los Gatos
Town Hall
110 E. Main Street
Los Gatos, CA 95030
RE: Villa Vasona Apartments
626 West Parr Avenue
Los Gatos, CA 95032
Dear Mr. Larson and Ms. Baily:
We are meeting with you today to discuss the sale of our property Villa Vasona
Apartments, a 107 unit Section 8 housing property for elderly low and moderate income
tenants located at 626 West Parr Avenue in Los Gatos.
We have been associated with this property beginning at mid construction in
1984, became the sole general partner in 1987 and have managed the property directly
since 1988. Villa Vasona Apartments is beautifully maintained and architecturally
striking (it won the Grand Award in the Pacific Coast Builders Conference 1985 Gold
Nugget competition), and we are very proud of being associated with this property.
We believe we have chosen an excellent Buyer to whom we have previously
successfidly sold several low and moderate income California properties. This Buyer
wants to reinvest with the Town and provide funds to upgrade and update this 27 year old
property so it will be repositioned to "like new" apartment property. The purchase will
require the application and receipt of 9% tax credits (formal application is March of
2012). Currently, only about 25% to 33% of the 9 % tax credit applications are
successfully awarded. While the process is extremely competitive, city participation can
be very beneficial.
EXECUTIVE OFFICES
22055 Clarendon Street • Suite 200 • Woodland Hills, California 91367 • (818) 615 -1818 • Fax (818) 615 -1810
a - 97ACl 1141E lT
Greg Larson
Sandy Baily
December 15, 2011
Page Two
The projected summary of a timetable for the sale would be as follows:
1. The finalization of a Purchase and Sale Aereement as soon as possible
2. Town approval of the sale - March, 2012
3. Formal application for 9% Tax Credit - March, 2012
4. Approval of Tax Credit - June, 2012
5. Close of the sale - between June, 2012 and September 2012.
Under the circumstances we must obtain Town approval of the sale prior to the
application for the tax credit due at the end of March, 2012.
If you have any questions or need additional information, please feel free to
contact us at (818) 615 -1818, extension 125 for Rob, extension 127 for Bobbi, or via
email at prngbobbi@earthlink.net
Sincerely, ``����
4TS
Robert Haskell
President
PMG, Inc., General Partner
Villa Vasona, Ltd., Owner
Villa Vasona Apartments
Bobbi Rosenquist
Property Supervisor
PMG, Inc., Management Agent
Villa Vasona Apartments
:br
G vwwem�.P,pom�.,uwon
Enclosures
I H ' i \ ql
250 W. Colorado Blvd., Suite 210
Arcadia, CA 91007
Telephone, 626 294 -9230
Facsimile, 626 294 -9270
March 9, 2012
Mr. Greg Larson
Office of Town Manager
110 E. Main Street
Los Gatos, CA 95030
RE: Villa Vasona Apartments, 107 Affordable Units for Seniors
Dear Mr. Larson:
Thank you and your staff for taking time to meet with us and discuss the preservation and rehabilitation of
Villa Vasona Apartments. As you are aware, Villa Vasona was built in 1985 to provide housing for 107
senior families. While the property has been well maintained and managed, it is in need of a substantial
renovation of the siding as well as modernizing the units and community residence space. Highland
Property Development LLC ( "Highland ") will enter into a purchase and sale agreement with Villa
Vasona, Ltd. (the "Seller ") to acquire the property with the intent to revive the asset for the community
for a new 55 year term of affordability for seniors.
As part of our acquisition, we request from the Town a replacement of the existing Agreement for
Disposition of Property adopted the 28 of September, 1983 (the "Agreement ") and accompanying First
Amendment to same dated the 5 of September, 1989 (the "Amendment "). With the exception of
portions of Section C and J of the Agreement, the language of both the Agreement and the Amendment
contemplate the purchase and development of land owned by the Town. As these obligations were met
by the Seller, we request that the Agreement and Amendment now be extinguished, and that Highland
enter into a new regulatory agreement with the Town incorporating the applicable covenant and
operational commitments from the Agreement. In exchange for a new Regulatory Agreement, Highland
proposes giving the Town a subordinated note secured against the property that would provide for 10% of
net cash flow to the Town, until the original principal of the note is repaid. This note and accompanying
Regulatory Agreement will provide the Town with a long term financial benefit as well as allowing
Highland the opportunity to derive the necessary federal and state affordable subsidies for a successful
renovation.
Highland commits to a minimum rehabilitation of $30,000 per unit, which would allow us to increase
current accessibility, cure existing known siding issues through a full replacement, and modernize each
unit with wood cabinets, solid surface countertops and new appliances. The major systems of the
buildings would be upgraded or replaced, including the roof and HVAC. Highland will commit to
continue to offer Housing Assistance Payment project -based rental assistance for the property to the
extent offered by HUD, to meet or exceed Town building and ordinance standards, and to provide quality
rental housing and ongoing programs for the residents.
Upon an award of federal subsidies by the California Tax Credit Allocation Committee to the property,
Highland will execute the new Regulatory Agreement with the Town, and will begin a detailed set of
question and answer resident meetings. We have a long history of working with the current Seller on a
number of affordable housing preservations, coordinating well with existing management, HUD and the
www.HighlandConipanies.com A77ACKVEI� 5
Mr. Greg Larson
Villa Vasona Apartments, 105 Affordable Units for Seniors
Page 2 of 2
local residents to answer questions and concerns. Our proposal would NOT increase the resident paid
portion of rent for any senior resident, and would substantially improve their current living environment.
Highland has experience in renovating thousands of apartment units without resident displacement, which
is a benefit in particular to a senior property.
Should you have any questions or wish to discuss this proposal in more detail, please feel free to contact
me at (626) 294 -9230.
Kind regards,
William E. Rice
Cc: Kristoffer J. Kaufmann
Paul Patiemo
Joel Paulson, Senior Planner, Town of Los Gatos
Gary P. Downs, Nixon Peabody LLP
/ IN The Highland Family of Companies
General Description
ighland's family of companies builds on its commitment to de- institutionalize affordable
housing within its developments. Highland revitalizes affordable housing properties "at
risk" of conversion to market rate housing, providing quality upgrades with
consideration of haw these improvements will affect the residents' home life. The Highland
Family of Companies manages each stage of the redevelopment process — from acquisition to
rehabilitation and procurement of debt and equity financing of multifamily affordable housing
communities throughout California.
The heart of the Highland family is Highland Property Development LLC (HPD), the development
arm of the organization. HPD has successfully acquired and rehabilitated 31 multifamily
developments representing 2,009 units. The majority of these developments has involved the
preservation of at -risk, rurally- situated affordable housing developments. HPD structures and
finances the developments with the assistance of federal Low - Income Housing Tax Credits
(LIHTC), tax - exempt bond financing, federal, state and city loans, privately placed debt and
various rental subsidy programs.
Highland Family of Companies October 2011
Capability Material
Highland Property Construction Inc. (HPC) is the general contracting entity responsible for
building, renovating and physically maintaining the Highland portfolio of properties. HPC also
provides construction services to other affordable housing developers.
P Highland Property Development LLC
Statement of Qualifications — Key Principals
William E. Rice
Mr. Rice, the Authorized Managing Manager of Highland Property Development LLC, is a founding
principal of the companies. His duties include the origination, sourcing, structuring, financing and
closing of affordable housing developments.
In the past S years Mr. Rice has originated and closed 31 apartment developments with 2,009 low -
income residential units. These financings have included a combination of structured tax - exempt debt,
private placement debt, tax - credit equity, HOME funds, city redevelopment funds, voter approved
housing loans and /or federal debt.
Prior to forming Highland, Mr. Rice worked for two separate tax credit syndication firms. He was
responsible for the re- syndication and redevelopment efforts of a large national REIT of affordable
housing. He has been active in the affordable housing industry since 1996.
Mr. Rice earned his degree in politics from Occidental College with a minor in economics.
Kristoffer J. Kaufmann
A founding principal of Highland with Mr. Rice, Mr. Kaufmann's core responsibilities include the oversight of
development applications, financial structuring, closing, audit accounting and tax, and property compliance.
Mr. Kaufmann previously served as NAPICO's Senior Financial Analyst, responsible for developing and
maintaining project -level projections from pre - development through closing to include the integration
of market data, construction - related reports and other due diligence documentation. Mr. Kaufmann
was responsible for coordinating property projections with asset management and syndication. Prior to
joining NAPICO in April of 1999 as a Financial Analyst, Mr. Kaufmann worked for WNC & Associates, Inc.
primarily as the Originations Analyst with experience in fund -level maintenance and analysis. Mr.
Kaufmann has worked on numerous low- income housing tax credit and bond applications. He has over
12 years of experience in the tax credit industry. He has been active in the affordable housing industry
since 1996.
Highland Family of Companies October 2011
Capability Material
t
Highland Property Develcpi LLC
Statement of Qualifications — Key Principals
Gary P. Downs
Mr. Downs practices in the areas of tax, corporate and real property law, specializing in affordable
housing, public law, municipal finance and tax credit finance. Mr. Downs received his Bachelor of Arts,
magna cum laude, in 1985 from DePauw University where he graduated with honors as a Phi Beta
Kappa. He attended the University of California, Hastings College of Law and earned his luris Doctor
degree in 1988. Mr. Downs has a broad range of experience in municipal finance matters, including
general obligation bonds, community facilities district financing, assessment district bonds, single and
multifamily housing financing, industrial development financing, tax allocation and certificate of
participation issues.
In addition, Mr. Downs profusely publishes and lectures on public and tax credit finance matters. Mr.
Downs is a member of the California State Bar and the American Bar Association. He is also a member
of the National Association of Bond Lawyers.
Douglas Day
Prior to joining HPD, Mr. Day was Vice President of Precision General Commercial Contractors, Inc. He
has worked with various developers, municipalities, redevelopment agencies, lenders, and equity
providers to bring projects from conception through pre - construction, to construction and close -out.
When projects are first identified, Mr. Day conducts due diligence and prepares reports identifying the
needs of newly identified projects. He collaborates with engineers and architects to define the scopes
of work and provide budget and feasibility analyses to help projects move toward closing. During
construction, he oversees site personnel and works closely with the project team to ensure realization of
construction goals. Mr. Day has successfully completed over 50 million dollars of construction,
comprising of overfour thousand five hundred units in five states.
Douglas Day received his Bachelor of Arts degree from California State University at Stanislaus and holds
a law degree from the University of Baltimore, School of taw. Areas of concentration included contract
law, land use and banking law. Mr. Day is a licensed contractor in California and Virginia. He has taught
an ICBO (International Conference of Building Officials) course in Sacramento to prepare students for
the building official exam.
Highland Property Development LLC
Statement of Qualifications — Key Principals
Dean Obst
Mr. Obst is Highland's Chief Operations Officer and has been with the company since 2007.
Mr. Obst oversees all asset management functions at Highland as well as, the asset management and
due diligence staff. Specific areas of expertise include property lease -up, loan conversions, property
management oversight, capital reserve analyses, and tax credit and federal compliance programs.
From 2003 to 2007, he was charged with the workout portion of the portfolio and then moved to
supervising a team of asset managers for Alliant Capital Ltd., a leading tax credit syndication firm. From
2000 to 2003, he was employed as an asset manager by National Partnership Investment Corporation
( "NAPICO "), which was acquired by Apartment Investment and Management Company ( "AIMCO ") at the
end of 2001. During his time with the company, he was responsible for overseeing a large portfolio of
new construction and rehabilitation tax credit properties including many federally assisted assets.
Mr. Obst received his Bachelor of Science degree in Business Management from California State
Polytechnic University Pomona and lives in Arcadia, California.
Paul Patierno
Mr. Patierno joined Highland in February 2009, and serves as its Chief Financial Officer.
Prior to joining Highland, Mr. Patierno served for seven years as a Vice President with AIMCO, a publicly -
traded (NYSE), Real Estate Investment Trust, and one of the nation's largest owners and operators of
affordable housing. Mr. Patierno directed the Company's national efforts to acquire and re- develop
affordable, multi - family developments through the LIHTC and other government programs. During such
time, he originated and closed 26 LIHTC- financed developments comprising 4,350 units. Mr. Patierno
was further responsible for maintaining State Agency relationships and internal policy development.
Prior to joining AIMCO, Mr. Patierno served as Chief Financial Officer and headed the Underwriting and
Due Diligence departments of NAPICO, a national tax credit syndication firm.
Mr. Patierno earned a degree in Business Administration from California State University Northridge and
is a Certified Public Accountant. Mr. Patierno lives in Tarzana, California with his wife and two
daughters.
Highland Family of Companies October 2011
Capability Material
Highland Property Development
250 West Colorado Boulevard
Suite 210
Arcadia, CA 91007
Phone (626) 698 -6354
Fax (626) 294 -9270
Website: www.highlandcompanies.com
C.�
SOO
CONSULTING INC.
M- Gl rn0r and UIn 221 Main Street
Suite 420
San Francisco CA
94105
415.618.0700
tax 415.618.0707
VIA EMAIL www.seiiel.com
March 14, 2012
To: Sandy Baily, Planning Manager, Town of Los Gatos
Joel Paulson, Senior Planner, Town of Los Gatos
From: Libby Seifel and Joshua Zade, Seifel Consulting Inc.
Subject: Due Diligence Findings for Acquisition and Renovation of Villa Vasona
by Highland Property Development
Seifel Consulting Inc. (Seifel) is pleased to deliver this memorandum summarizing our due
diligence analysis of the proposed acquisition and renovation of Villa Vasona, an affordable
senior housing development, by Highland Property Development (Highland).
This memorandum presents our evaluation of Highland's proposal to the Town of Los Gatos
(Town) in order to make a determination that Highland would be willing and capable of
fulfilling all of the obligations of the developer, as described in the 1983 regulatory agreement
between Villa Vasona's original developer and the Town, in Section V.12 of Ordinance 1698 of
1986 and in the 1989 amendment to the original agreement (the Agreements). As required in the
Agreements, the current owner cannot sell, assign or transfer the property, or bring in a new
general partner, without an express prior finding by the Town Council that the new purchaser
and/or developer will meet these obligations.
In summary, Seifel finds that Highland has sufficient experience and financial capacity to
provide affordable housing services at Villa Vasona and to meet the Town's expectations for
affordability, upkeep and management. Highland is proposing two amendments to the
Agreements that require negotiation with the Town. Seifel's understanding is that the terms of a
new or amended agreement to replace the existing Agreements will be submitted to the Town
Council for future consideration.
ATTAr:'@1F,NT 6
Due Diligence Methodology
Seifel performed its due diligence analysis on the Highland proposal during February and early
March 2012 based on discussions with Town staff and representatives of Highland, as well as
the review and evaluation of the following key documents provided by Town staff and
representatives of Highland:
• Highland's construction budget and multiple drafts of its pro forma financial analysis of
the proposed purchase and renovation of Villa Vasona;
• Recent financial audits of the property and documentation related to the property's
Section 8 rental assistance contract;
• A Physical Condition Assessment of the property prepared for Highland by
Commercial Property Solutions, LLC;
• An appraisal of Villa Vasona prepared by Novogradac & Company on behalf of
Highland in February 2012;
• The executed letter of intent between Highland and PMG, Villa Vasona's current
General Partner;
• Background material on Highland Property Development, including financial
statements;
• The 1983 regulatory agreement between Villa Vasona's original developer and the
Town, Ordinance 1698 of 1986 and the 1989 amendment to the original agreement (the
Agreements) along with related documents provided by Town staff.
Property Background
Highland seeks to acquire and renovate the 107 -unit Villa Vasona senior apartment complex
located at 626 West Parr Avenue in the Town of Los Gatos. Villa Vasona includes 81 garden
apartment studios and 24 one - bedroom townhome units, all supported by project -based HUD
Section 8 rental assistance. Two additional one - bedroom units serve as non - revenue generating
manager and maintenance units. The property was originally constructed in 1985 and is in fair
overall condition. The Section 8 contract was renewed in 2010 for a term of five years.
Villa Vasona's original developer purchased the project site from the Town. As part of the land
purchase, the original developer paid the Town a negotiated purchase price that was below the
market value for the land and entered into an agreement with the Town to do the following:
• Restrict the use of the site to housing for elderly persons eligible for Section 8
assistance or for elderly persons of low and moderate income;
• Lease the property in accordance with the Town's Occupancy Preference System;
Seifel Consulting Inc.
• Maintain the housing on site in accordance with Town maintenance standards;
• Abide by Town property management standards;
• Obtain a finding from the Town Council that a potential purchaser would be able to
fulfill the terms of the agreement prior to selling, assigning or transferring the property;
• Maintain the property in private ownership, subject to ad valorem taxation (property
taxes);
• Obtain written approval from the Town before placing any new liens or encumbrances
on the property;
• Resell the property to the Town, at the Town's option, 65 years after the execution of
the first amendment to the original agreement (estimated to be 2054), for the amount of
one dollar ($1).
This memo summarizes Seifel's analysis of Highland's willingness and ability to comply with
these terms of the Agreements between Villa Vasona's developer and the Town. In discussions
with Seifel, Highland has verbally indicated its willingness to abide by the terms of the
agreement with two exceptions:
• Highland wishes the Town to modify the requirement that Villa Vasona remain subject
to ad valorem taxation and substantially reduce the amount of property taxes that it
would pay. Highland is proposing to partner with a non - profit housing corporation and
intends to seek a welfare exemption from ad valorem taxation, and
Highland proposes to extinguish the previous Agreements between the original
developer and the Town and enter into a new agreement extending the time period that
the property will remain affordable and imposing deeper affordability requirements than
the current agreement. Highland also proposes to buy out the Town's option to
repurchase the property and enter into a loan agreement with the Town that provides for
a deed of trust and note in favor of the Town in the amount of $1.85 million as
compensation for the Town's option.
Town staff intends to negotiate these two issues with Highland in the near future. Highland's
ability to abide by the terms of the agreement will be affected by the resolution of these two
issues, as well as its ability to be competitively awarded nine percent Low Income Housing Tax
Credits (9% Tax Credits) by the California Tax Credit Allocation Committee (TCAC), which
are estimated by Highland to generate $9.4 million to help pay for the purchase and renovation
of the property.
Summary of Highland Proposal
Highland has executed a letter of intent to purchase Villa Vasona from PMG, the property's
current General Partner, for $15 million. Highland will negotiate a Purchase and Sale
Seifel Consulting Inc.
Agreement with PMG. A recent appraisal prepared for Highland by Novogradac & Company
valued the property at $22.8 million (with the underlying land valued at $3.7 million as if
vacant).
Highland proposes to acquire and then renovate the property, including improvements to the
grounds (signage, landscaping and paths), building envelope (new siding, roof and windows),
apartment interior upgrades (new unit appliances and finishes) and utility efficiency (installation
of energy and water saving fixtures and appliances). Tenants are expected to remain in place
throughout the renovation process. Highland's construction budget of $4.23 million is in line
with the rehabilitation budget set forth in the Property Condition Assessment prepared by
Commercial Property Solutions.
Highland's financing plan utilizes both conventional financing and equity raised from the sale
of 9% Tax Credits. Highland intends to apply for an allocation of the competitive
9% Tax Credits in the first round of 2012, with an application deadline of March 22, 2012.
Highland's proposal is highly reliant on the $9.4 million in anticipated equity investment that
would be attracted by an allocation of these tax credits. An alternative financing strategy could
involve the use of non - competitive 4% Tax Credits coupled with tax - exempt bonds. Seifel has
discussed this alternative with Highland, but Highland has not prepared a financial model using
this structure.
Summary of Findings
Qualifications, Experience and Financial Capacity of Highland Property Development
Highland has substantial experience acquiring and renovating affordable housing in California.
Highland Property Development was established in 2003, and has acquired and renovated more
than 30 affordable housing developments including more than 2,000 units.
Seifel contacted city staff in northern California communities where Highland has acquired and
renovated affordable housing. Seifel spoke with Kristen Maze, Development Services Director
for the City of Anderson, k\ ho reported a very positive working relationship with Highland and
a significant improvement in the quality of the development that Highland acquired and
renovated in Anderson in 2010 -11. Seifel also spoke with Leslie Woodman, the former Housing
Coordinator for the City of Rocklin, who likewise gave a positive report on Highland's
acquisition and renovation of the Shannon Bay Apartments from 2008 -10. Highland secured a
loan from the Rocklin Redevelopment Agency to subsidize the Shannon Bay project. Steve
Lierly of the Sacramento Housing and Redevelopment Agency also gave a positive review of
Highland's performance.
A review of Highland's unaudited financial statement indicates that the company's financial
position is strong, with adequate resources to undertake the proposed acquisition and renovation
of Villa Vasona.
Seifel Consulting Inc.
Compliance with Terms of Agreement
As described earlier, Highland is requesting that the Town modify the terms of the Villa Vasona
regulatory agreement in two ways: modify the property tax obligation and eliminate the
purchase agreement provision. The implications of each of these requests are described below
and are discussed in terms of the potential impact on the financial projections for the property
upon its sale and renovation. Seifel understands that these issues will be negotiated with staff
and will be presented to the Town Council for future consideration.
Reduction in Payment ofProoerty Tar
Highland is requesting that the Town modify the property tax requirement in the Agreements, as
it intends to enter into a partnership with a non - profit housing organization (either
National Housing Corporation or Hearthstone Housing Foundation) as the Managing General
Partner of the entity established to own, renovate and operate Villa Vasona. Seifel has not
evaluated the qualifications, experience or financial capacity of the proposed Managing General
Partner.' With a non - profit general partner in place, Highland would seek a welfare exemption
from ad valorem property taxes. Highland has indicated that the property would continue to pay
special assessments, including the sewer assessment.
Staff will be negotiating with Highland regarding the potential waiver of payments for regular
ad valorem property taxes. The current owner is assessed $107,735 in property taxes, including
$25,155 for special assessments, and thus the Town would lose its share of at least $83,000 in
property tax revenues if this agreement were modified. If the Town does not waive this
provision of the agreement, then Highland would need to factor payment of property taxes into
their financial analysis, as further described below.
Buy -out of Purchase Option
The Town has the option to repurchase the property in 2054 (65 years after the 1989
amendment to the original regulatory agreement). Highland seeks to buy out the Town's option
and, if possible, to structure the option buy -out in the form of a residual note to the Town. In
effect, Highland is requesting that the Town loan Highland the amount of the option buy -out.
This loan could potentially represent public assistance for the purpose of enhancing Highland's
9% Tax Credit tiebreaker scoring. Highland plans to purchase the property for $15 million,
while the property has been appraised at $22.8 million. Highland has indicated that they value
the Town's option based on the $7.8 million difference between the proposed purchase price
and the appraised value. The versions of the project pro forma reviewed by Seifel do not model
the proposed Town loan or its repayment.
Highland has not provided qualifications, background or other materials on either of these potential partners. Given
that the non -profit would be the Managing General Partner of Villa Vasona, Seifel recommends that the Town
request additional information about the proposed non -profit partner, including a description of their role in
development and operations and their qualifications.
Seifel Consulting Inc.
Pro Forma Review
As noted, the construction budget for renovation of Villa Vasona is equal to the projected
budget identified in the Property Conditions Assessment. Seifel has not sought independent
verification of the construction cost estimates for renovation, but based on its experience with
similar rehabilitation projects, the projections of hard and soft costs appear within reasonable
ranges. Highland's developer fee of $2 million is equal to the maximum allowed by TCAC, and
Highland is proposing to be paid the full $2 million, but to defer a portion of the fee during the
early years of operation.
Although Highland has not identified specific lenders for construction and permanent financing,
the loan terms utilized in their analysis are generally in line with current loan pricing and are
somewhat conservative, particularly on construction loan pricing.
Highland's pro forma projections of renovation and future operations rely on reasonable
assumptions of rental income, vacancy and inflation. The pro forma utilizes assumptions for
tenant rents, operating expenses and reserves, and replacement reserves that are consistent with
the minimum standards of the California Tax Credit Allocation Committee (TCAC) and the
conditions of the property's HUD Section 8 contract. Projected operating expenses are
approximately $4,600 per unit —above the minimum expense per unit of $4,500 set forth for
senior projects in the South Bay region, but below the $5,100 minimum expense per unit set
forth for at -risk projects.'
Based on the latest pro forma, the property's projected operating performance is strong. Net
income is sufficient to maintain acceptable debt service coverage ratios, and residual revenues
are projected to be sufficient to repay deferred developer fees within the time period allowed by
TCAC regulations. Repayment of deferred developer fees is projected to require almost all net
cash flow through year 8 of operations. After repayment of the deferred developer fee, the
property is projected to generate in excess of $200,000 of distributable cash flow annually
starting in Year 9.
While the pro forma assumes Year 1 payment of approximately $25,000 in special assessments
(escalating over time), it does not assume payment of the ad valorem property taxes attributable
to 1.1466 percent of total value, as levied on the current owner by the Santa Clara County
Assessor.' Assuming that the developer were to pay 1.1466 percent of the proposed purchase
price of $15 million, the payment of property taxes, in addition to the special assessments,
would be $172,000, which would reduce the potential net operating income by up to this
'- Scifel spent considerable time speaking with Highland regarding its financial analysis and observed that several pro
forma assumptions, including operating expenses, were not originally in line with TCAC requirements. Highland
prepared several revisions to the pro forma financial analysis, and the latest pro forma submitted on
March 10, 2012, appears to be generally consistent with TCAC underwriting guidelines for senior housing in the
South Bay. However, Highland has verbally indicated that they plan to apply for tax - credits through the at -risk set
aside, which requires a higher level of operating expenses (S5,100/unit).
' According to the County of Santa Clara County, the current property taxes are $107,735. 525,155 in special
assessments and 582.580 in other property taxes.
Seifel Consulting Inc.
amount per year.' Based on the assumed Debt Service Coverage ratios for the first and second
mortgages in the most recent pro forma, payment of regular property taxes would reduce funds
available for debt service and result in a lower level of supportable debt. The project as
proposed may be able to support some level of regular ad valorem property taxes, but further
financial analysis would be required to make a determination of supportable levels of debt and
taxation.
Risk Factors
Several contingencies could impact Highland's ability to successfully purchase, renovate and
operate Villa Vasona and comply with the terms of the agreement between the Town and the
original developer:
Failure to secure an allocation of 9% Tax Credits would render Highland's proposed
acquisition and renovation proposal infeasible, as Highland is relying on a Tax Credit
equity investment of $9.4 million to fund the acquisition and renovation. Seifel has
suggested that Highland prepare an alternative proposal utilizing a combination of
non - competitive 4% Tax Credits and tax - exempt bonds, as the allocation of
4% Tax Credits is much less competitive than 9% Tax Credits.
Highland's operating projections are based on renewal of the project's HUD Section 8
Housing Assistance Program contract, which provides approximately $250,000 in
annual rental assistance but is set to expire in 2015. Highland intends to renew this
contract, but failure to renew this assistance would result in lower rental income or the
need to charge substantially higher rents to tenants. Based on the current pro forma, the
property would not be financially sustainable at the maximum rents allowable with 9%
Tax Credits without the Section 8 rental subsidies. A likely benchmark for higher rents
would be the Section 8 Contract Rents used in Highland's pro forma, these rents are
affordable to households of moderate income (80% AMI), as required by the
Agreements.
Highland's pro forma expense schedule includes payment of special assessments but
does not include payment of ad valorem real estate taxes on the total assessed value. If
the Town does not modify the requirement that the property pay ad valorem taxes and
enable Highland, through its proposed non - profit Managing General Partner, to seek a
welfare exemption, then Highland would need to revise its financial analysis to
demonstrate the financial viability of the proposed acquisition and renovation after
taking into account the potential reduction in net operating income from increased
payment of property taxes.
4 Even without a welfare exemption, the developer could request the Assessor to reduce the assessed value below the
stated purchase price due to the restricted income potential of the development as affordable housing. However, as
the amount of this reduction is uncertain, this analysis assumes that the property taxes are based on the stated
purchase price for the property.
Seifel Consulting Inc.
Conclusion
Highland's proposed renovation plan would improve the grounds, upgrade the buildings (both
exterior and interior), modernize dwelling units, and improve energy and water efficiency of
Villa Vasona. Highland appears to have the experience, qualifications and financial capacity to
acquire and renovate the property.
Highland's pro forma financial analysis assumes that the property will not be required to pay
regular property taxes and also assumes that the Developer receives a competitive allocation of
9% Tax Credits (leveraging $9.4 million in funding) and secures a renewal of its Section 8
Housing Assistance Program contract in 2015 (currently providing a subsidy of $250,000 per
year over proposed TCAC rents).
Highland is willing to comply with the terms of the Agreements between Villa Vasona's
developer and the Town except that Highland is requesting that the Town reduce the
Developer's property tax obligation and surrender the purchase agreement provision that
enables the Town to purchase the property for $1 in 2054 for considerations to be negotiated.
As described in this memorandum, the implications of each of these requests will affect
Highland's capability to meet the obligations of the original agreement. Highland intends to
negotiate a new agreement with the Town that will address these issues and be submitted to the
Town Council for consideration.
Seifel Consulting Inc.
RESOLUTION 2012 -
RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS
FINDING THAT THE PROPERTY TRANSFER OF 612 AKA 626 W. PARR AVENUE,
FROM VILLA VASONA LTD TO HIGHLAND PROPERTY DEVELOPMENT LLC,
WILL CONTINUE TO FULFILL ALL OBLIGATIONS REQUIRED UNDER PLANNED
DEVELOPMENT ORDINANCE 1698 AND AUTHORIZING THE TOWN MANAGER
TO NEGOTIATE A NEW AGREEMENT.
WHEREAS, that in 1983 the Town of Los Gatos entered into an Agreement for
Disposition of Property with Villa Vasona Ltd. for the property at 612 aka 626 W. Parr Avenue;
and
WHEREAS, that in 1986 the Town Council adopted Ordinance 1698 to allow the
construction of 107 Section 8 senior apartments, including ten units for the physically
handicapped; and
WHEREAS, that Ordinance 1698 contains a provision that requires the Town Council to
make a finding that the purchaser is willing and able to fulfill the obligations under the 1983
Agreement for Disposition of Property or any amendments thereto prior to any sale or transfer; and
WHEREAS, that in 1989 the Town of Los Gatos entered into a First Amendment to the
1983 Agreement for Disposition of Property because the property was transferred from Villa
Vasona Ltd. to PMG; and
WHEREAS, PNIG intends to sell the property to Highland Property Development LLC;
and
ATTACHMENT 7
WHEREAS, Seifel Consulting, Inc. conducted a thorough analysis of Highland Property
Development LLC and has found the company has both the experience and financial capacity
necessary to continue providing the housing services and meet the Town's expectations for the
affordability, upkeep, and management of the property; and
WHEREAS, Highland Property Development LLC wants to rescind the 1983 Agreement
for Disposition of Property and the First Amendment to the 1983 Agreement for Disposition of
Property and negotiate a new Agreement that does not require them to pay property taxes and
removes the Town's option to repurchase the property; and
NOW, THEREFORE, THE TOWN COUNCIL OF THE TOWN OF LOS GATOS
DOES HEREBY RESOLVE that Highland Property Development LLC is willing and able to
fulfill the obligations of the 1983 Agreement for Disposition of Property and the First Amendment
to the 1983 Agreement for Disposition of Property.
FURTHER RESOLVED, by the Town Council that the Town Manager is authorized and
directed to negotiate a new agreement, subject to Town review and approval, with Highland
Property Development LLC on behalf of the Town of Los Gatos.
I
PASSED AND ADOPTED at a regular meeting of the Town Council held on the 19th day
of March, 2012, by the following vote
COUNCIL MEMBERS:
AYES:
NAYS:
ABSENT:
ABSTAIN:
SIGNED:
ATTEST:
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
CLERK ADMINISTRATOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
N "DEV'RESOS 2012V1LLAVAS0NA.D0CX
Ais PCla e
Intentionally
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