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HomeMy WebLinkAboutHRDC Monitoring AgreementMemorandum of Understanding Between Human Resource Development Council and Midtown Aspen LLC August 1, 2023 HRDC: Human Resource Development Council ("HRDC"), a Montana nonprofit public benefit corporation. Midtown Aspen: Midtown Aspen LLC (“Boundary”), a Washington limited liability company. HRDC and Midtown Aspen are referred to herein as the "parties." Developer: Boundary and HRDC Project: Tax Exempt Bond 4%, and 9%Tax Credit financed multi-family rental property ("Project"): Approximately 40 Family Apartments, located in Bozeman, MT. LURA: All of the units will be rent and household income restricted subject to a recorded regulatory agreement targeting families with incomes ranging from 50-60% of AMI. Project Ownership: Pre-Development Responsibilities: The Project will be owned by a to-be-formed LLLP of which HRDC or wholly owned affiliate will serve as Co-GP, and Boundary or an affiliate will serve as a Co-GP. It is also anticipated that there will be a tax credit investor limited partner admitted into the Project Owner. Boundary and HRDC will collaborate in all elements of the Project including determination of the development team, scope/budget, operating budgets, and preparation of the LIHTC / Tax Exempt Bond LIHTC applications. Boundary will, on behalf of the Project Owner, apply for and successfully obtain a commitment for all necessary financing (both construction and long term); have lead responsibility to develop the design and specifications; develop the operating budgets; negotiate with investors and select final financing terms; be responsible to contract for the cost certification and obtaining 8609's. HRDC will, on behalf of the Project Owner, apply for and successfully obtain real estate tax abatement or PILOT's; have lead responsibility for obtaining grant or soft gap loan funds to benefit the overall project. In addition, HRDC will have certain responsibilities with regards to the project management after initial closing through completion. 2 Guarantees: Financing Plan: Development Fee: Project Management: Boundary will be responsible for all predevelopment costs until construction loan closing at which time all predevelopment expenditures shall be reimbursed to Boundary. Boundary will expend predevelopment costs based on the intent of HRDC to move forward with the project with Boundary under the terms described in this Memorandum of Understanding. Boundary to provide all lender guarantees for the Project, including but not limited those relating to predevelopment, construction budget, completion schedule, lease-up, operating expenses and tax credit compliance. The Project's primary funding source will be loan proceeds derived from the issuance of Tax Exempt Bonds and equity raised by the sale of Federal 4% and 9% low- income housing tax credits (LIHTC). In addition, Boundary and HRDC will pursue real estate tax abatement, solar credits and soft loans to benefit the development and financing plan. The Development Fee as permitted under the LIHTC program will be paid to Boundary (85%) and HRDC (1%) as the fee is paid by the transaction. The cash developer fee (paid from capital sources, not operating cash flow) is estimated at approximately $1,200,000, but may change with final underwriting. HRDC development scope: provide support with entitlement process with City, coordinate with Boundary with tax exempt bond applications to MBOH, assist Boundary to close debt and equity, prepare applications for real estate tax exemption. HRDC will provide project management services to the project and earn a project management fee for these services will be $1,000 per month beginning at the closing of the tax credit partnership and construction loan through final Certificate of Occupancy. The scope includes: Predevelopment Phase: attend regular meetings during predevelopment with design and construction team, providing input into building design, value engineering, assist in establishing and evaluating contractor budgets, assist with entitlements and permitting; Construction Phase: monitor project construction with regular visits, attend monthly pay application meetings on behalf of Owner, prepare monthly draws to lender, respond to construction related questions from lender and investor, assist in securing Certificates of Occupancy, assist with final punchlists. 3 Cash Flow: Tax Benefits: After payment of the tax credit investor's asset management fee, cash flow will go to pay any Deferred Developer Fee until fully paid. After payment of the Deferred Developer Fee there will be typical provisions for repayment of any Operating Loans before payment of certain incentive, compliance or other fees to the General Partners. These fees will be split 90/10 between Boundary and HRDC respectively. It is the intent of the parties that all owner/developer compensation, no matter how it is labeled or defined in the partnership agreement be split 90/10 for Boundary and HRDC respectively. All Federal and State tax benefits and liabilities that accrue to the Project and are not purchased by the tax credit investor shall be allocated to Boundary, including losses, depreciation and renewable energy tax credits. Guarantee Fee: Asset Management / Property Management: Back End: Only in the event Boundary makes contributions to the Project as required under the Construction Completion, Operating Deficit and/or Tax Credit Compliance guarantees, and not sooner than 10 years after the project is placed in service, a fee equal to the after tax adjusted amount of the contribution from a portion of the proceeds of the refinancing of the conventional first mortgage or supplemental mortgage on the Project using standard lender underwriting criteria shall be paid to Boundary. The Guarantee Fee will only be equal to the after tax guarantee contribution amount made by Boundary, not the total proceeds of the refinancing. This fee will be limited to the maximum guarantee cap as mentioned in the Project Owner and Lender guarantee documents. Boundary will have primary responsibility for asset management of the property post construction and stabilization. HRDC will be the property manager, pursuant to a separate property management agreement. Back end proceeds from a market value sale of the property after payment of transactions costs, limited partner fees/splits, will be split 90%/10% between Boundary and HRDC respectively. HRDC will be provided a right of first refusal to purchase the Property at the end of the initial compliance period. INTRODUCTION Founded in 1975, the Human Resource Development Council (HRDC) is a non-profit community action agency dedicated to strengthening community and advancing the quality of people’s lives. We serve customers of all ages through every stage of life, providing services that facilitate our customers’ goals to achieve self – sufficiency and stability in their lives. We collaborate freely with other organizations with missions similar to ours as well as those which provide essential services to our customers. SUMMARY OF QUALIFICATIONS HRDC’s Resource Property Management (RPM) came into existence in 1995 in response to the need for traditional pr6perty management that could also provide the eligibility and compliance functions needed to operate affordable housing rental properties. RPM provides property management services for properties utilizing HUD, Tax Credit, HOME and Rural Development financing and subsidies. Currently RPM operates 16 properties representing over 400 units serving families, elderly and persons with disabilities. It is our goal to provide outstanding property management services so that it brings value to the owners and the residents. We have a holistic approach to Property Management. We realize that affordable housing is only one dimension to creating a stable and sustainable environment for our residents. We are very proud to leverage our existing programs to meet our residents right where they are and provide the right tools and resources at the right time. We are extremely proud of our programs and our success rate. Our programs serve our community members and residents in these seven areas: Transportation, Senior Empowerment Programs, Food and Nutrition, Housing and Homelessness, Child and Youth Development, Home Heating, Efficiency, and Safety, and Community and Economic Development. We can provided an in-depth overview of these programs upon request. SERVICES FOR PROPERTY MANAGEMENT OPERATIONS We specialize in these categories of operations: Administrative, Financial and Physical. ADMINISTRATIVE OPERATION Prepares and maintains all necessary paperwork needed for compliance with all affordable housing regulations:  Tenant Selection Plan  Fair Housing Training  Applicant Screening – Acceptance/Rejection  Applicant Eligibility and Rent Determination  Waiting List Management  Leasing  Tenant Rules & Enforcement  Annual Lease Renewals  Administer Requests for Reasonable Accommodations & Modifications  Conduct Re-Certifications and Interim Certifications as needed  Maintain Tenant Files in compliance with HUD guidelines  Prepare Property Operations Procedures Manual and train staff  Coordinate use of HUD’s EIV system for tenant income and subsidy information  Participate in HUD Management & Occupancy Review (MOR) and Physical Inspections (REAC)  Administer Requests for Reasonable Accommodations & Modifications FINANCIAL OPERATION Maintain complete and accurate records of all financial transactions for compliance. Maintain and plan for the ongoing stability of the property.  Maintain financial records using accepted accounting principals  Record all Accounts Receivable due the property by source i.e. tenant rent, insurance reimbursement etc.  Record all Accounts Payable; prepare summary for approval of all invoices  Pay vendors accounts due within 30 days  Prepare monthly financial statements to include Balance Sheet, Income Statement and Trial Balance  Transmit monthly HUD Tenant Certifications  Submit HUD Voucher for payment via TRACS system  Maintain checking & savings accounts for Operating Funds, Tenant Security Deposit and Reserves  Develop property budget in conjunction with owner  Place insurance coverage for property  Coordinate with Owner’s accounting firm for preparation of tax returns PHYSICAL OPERATION Maintains the investment of the property by providing ongoing repair and maintenance.  Unit Inspections  Exterior Inspections  Work order/Supervise Follow-up  Reconditioning of vacant units  Response to emergencies  Preventive maintenance program  Replacement, repair and improvement program COST OF SERVICES Management Fee: 7.5% Site Manager: TBD