HomeMy WebLinkAbout8.6 FairwayRan LoanCommit
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e. CITY CLERK
File # D~[l]]~-~[Q]
AGENDA STATEMENT
CITY COUNCIL MEETING DATE: July 1,2003
/
SUBJECT:
Loan Commitments and Letters of Support and Commitment of
Financial Contribution for the California Debt Limit Allocation
Committee (CDLAC) bond allocation applications for Fairway
Ranch.
Report Prepared By: Julia Abdala, Housing Specialist
ATTACHMENTS:
1. Letters of Support for the Fairway Ranch Senior Housing Project.
and the Fairway Ranch Multi-Family Project
2. Resolution authorizing two Loan Commitments for the Fairway
.Ranch Senior Housing Project and the Fairway Ranch Multi-
Family Housing Project
3. Fairway Ranch Financial Spreadsheets for the Senior Housing
Project and for the Multi-Family Housing Project and Pro Forma
. Assumptions Narrative.
RECOMMENDATION:
~
Staff recommends that the City Council:
1. Approve the letters of support for both Fairway Ranch Projects,
the Senior Project and the Multi-Family Project, and authorize
the Mayor to sign on behalf of the City;
2. Approve the Loan Commitments for the Senior Project and the
Multi-Family Project; and (Exhibit A to Resolution)
3. Adopt a resqlution (Attachment 2) approving the Loan
Commitmerits and authorizing the Mayor to sign on behalf of the
City.
FINANCIAL STATEMENT:
the letters of support for the CDLAC application and the signed and
,'executed Loan Commitments commit the City to two loans, one for
/ the Fairway Ranch Senior Housing Project and one for the Fairway
Ranch Multi-Family Housing Project. Each loan is not to exceed
$2,250,000 of Affordable Housing In-lieu Fee funds. The loans will
be paid back to the City 1/3 in year 4, 1/3 in year 5 and the final third
in year 6 after the disbursement of the funds for each project; 3%
simple interest will be charged for each loan.
DESCRIPTION:
At the February 18, March 4, and April 1 City Council meetings, the City Council conceptually
considered a proposal by the Lin Family to construct a three-phase, 930-unit project in Dublin Ranch Area
B consisting of senior, Multi-Family and condominium developments with an aggregate total of 587
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affordable units designed to satisfy the Inclusionary Zoning obligation for the development of up to 2,655
units in the remainder of Dublin Ranch.
The financial pro formas (Attachment 4), which are subject to the review and approval of bond counsel,
the project tax credit accountant, and the provider of credit enhancement for the bonds, show two projects
with multiple funding sources. Each project will be financed separately, but the basic financing structure
is the same. The funding for these two projects is currently proposed to consist of tax-exempt bonds
backed by a Fannie Mae credit enhancement, Low Income Housing Tax Credits, conventional
construction loans backed by a letter of credit, loans from CalPERS, and financing from the City of
Dublin. The Senior Housing development shows a Total Project Cost of $65,501,000 and Multi-Family
Housing development lists a Total Project Cost of $70,078,000. Other features of the pro formas include
ground leases for both properties, allowing the current property owners to retain ownership of the
property. For the first years no ground lease payments will be due from these projects. The pro formas
show that ground lease payments begin in year 8 for the Senior Housing Project and in year 12 for the
Multi-Family Housing Project. During the construction period the developer is also deferring receipt of
the fees that are usually charged to develop projects. In addition, the pro formas show a supplemental
contribution from the developer in years 2, 3 and 4 following construction. These supplemental
contributions (which coincide with the repayment schedule for the City's loan) will allow the projects to
achieve sufficient cash flow to maintain required debt service coverage. The pro formas show repayment
of the supplemental contributions to the developer in years 5-8 for the senior project and in years 8-12 for
the Multi-Family project.
City Staff has been working with the developers' representatives to come to agreement on various issues
relating to the development and affordability of the various projects. These negotiations have been
productive, and at this time the developers are preparing to submit two applications for tax-exempt bond
allocations. One application is for the Senior Housing Project and the second for the Multi-Family
Housing Project.. These applications are due to the California Debt Limit Allocation Committee
(CDLAC) by July 16, 2003. To be able to effectively compete for this funding source, the developer has
asked the City to provide the following items:
1. A letter of support, one for each project
2. Documents committing the City of Dublin to make a loan to each project
ANALYSIS
Letters of Support - A letter of support (Attachment 1) is used by the developer to provide the CDLAC
reviewers with proof that the City supports development of the projects in the community. The letters
further indicate the financial assistance that the City of Dublin is willing to provide. For these two
projects the letters describe the City's financial assistance as the loans to support the developments and
the waiver of future commercial linkage fees on Dublin Ranch commercial development.
The letters of support indicate the amount of the loans that the City of Dublin has agreed to provide
($2,250,000 per each project), the timing of the funding of the loans (at construction loan closing), the
interest rate (3% simple interest), and the estimated value of the commercial linkage fee waiver
($1,000,000).
Loan Commitment Letters - The City Attorney has drafted two Loan Commitment documents, which
describe the conditions under which the City will provide financial assistance to the projects. One
commitment letter would serve for the Senior Housing Project and one for the Multi-Family Housing
Project. These commitment letters, when executed by both the developer and the City, would commit the
City of Dublin to provide a total of $4.5 million in financing - a $2,250,000 loan for each of the two
2
projects. The security for the City of Dublin's loan is property external to the Fairway Ranch development
in the Dublin Ranch. The City through a Deed of Trust would hold this collateral property until such time
that both of the City's loans are paid back in full. The Loan Commitments describe the following:
1. The loan amounts
2. The loan terms and repayment schedule
3. The interest rate
4. The purpose for which the loan proceeds may be used
5. Description of the collateral property that will secure the loans
6. The documents that will be executed in connection with the loan
7. Description of the Declaration 'of Covenants, Conditions and Restrictions and the Regulatory
Agreements for the two projects which will require the very low-, low- and moderate-income
units developed as part of the Senior and Multi-Family projects to remain affordable for 55
years.
8. Additional items the developer is required to deliver to the City in connection with the loans.
The loan amount - Through negotiations, the City of Dublin agreed to finance the Fairway Ranch
projects with a maximum of $4.5 million. Since the first two projects are the two that will be applying
for bonds and tax credits, the developer requested that these two projects, the senior phase and the
multi-Multi-Family phase, receive the City financing. The total amount was divided into two loans of
$2,250,000 each.
The loan terms & repayment schedule - The loan will be completely paid back to the City by the sixth
year after the funds are provided. The first 1/3 would be due on the 4th anniversary of the fund
disbursement for the project, 1/3rd would be due on the 5th anniversary of the fund disbursement and
the final 1/3 would be due on the 6th anniversary of fund disbursement.
The interest rate - The City of Dublin agreed to charge 3% simple interest on both of these loans. The
interest accrued on the outstanding principal balance of each loan will be paid together with the
payments of principal due in years 4, 5 and 6 of the loan term.
Use of the loan proceeds - The Loan Commitment specifies that the loan proceeds may only be used
for third-party construction costs for the very low-, low- and moderate-income units constructed as
part of the development.
Collateral property - The City's loans will be secured by a first deed of trust on the commercial
property along Dublin Blvd. now owned by the Lin Family.
Documents - The Commitment Letter describes the additional documents that the developer will be
obligated to provide in connection with the loans. These include a Deed of Trust, a Promissory Note
for each loan, environmental and general indemnity agreements indemnifying the City against liability
arising in connection with breach of developer's representations or violation of environmental laws.
Covenants, Conditions and Restrictions and Regulatory Agreements - These documents will require
the low-, very-low and moderate-income units developed within the Senior Housing and Multi-Family
Housing Projects to remain affordable for 55 years. The documents will be recorded against the
property and will be binding on the owner's successors.
Additional Deliveries and Conditions - The Loan Commitment Letters describe additional conditions
with which the developer must comply, including delivery of title insurance, a survey, and an
environmental report for the Collateral Property, proof of project financing, marketing and
management plans.
CONCLUSION
In conclusion, the developers of Fairway Ranch are preparing to apply to the California Debt Limit
Allocation Committee for an allocation of tax-exempt bonds to finance the Fairway Ranch Senior
Housing Project and the Fairway Ranch Multi-Family Project. This type of financing is highly
competitive, and the developer is working toward providing thorough and convincing applications. The
City of Dublin has demonstrated a strong interest in affordable housing and is working with the
developers of Fairway Ranch to facilitate development at this Dublin Ranch site. It is in the interest of the
City of Dublin and the developers of Fairway Ranch to work together in the effort to secure financing for
the two first phases of Fairway Ranch.
Staff has provided letters of support (Attachment 1) that include the City's financial contribution and the
City Attorney has drafted Loan Commitments for the Senior Housing Project and the Multi-Family
Project. These documents should assist the developers in producing more competitive funding
applications.
RECOMMENDATION:
Staff recommends that the City Council:
1. Approve the letters of support for both Fairway Ranch Projects, the Senior Project and the Multi-Family
Project, and authorize the Mayor to sign on behalf of the City;
2. Approve the Loan Commitments for the Senior Project and the Multi-Family Project; and
3. Adopt a resolution (Attachment 3) approving the Loan Commitments and authorizing the Mayor to sign
on behalf of the City.
CITY OF DUBLIN
100 Civic Plaza, Dublin, California 94568 Website: http://www.ci.dublin.ca.us
July 1, 2003
Ms. Laurie Weir, Executive Director
California Debt Limit Allocation Committee
915 Capitol Mall, Room 308
Sacramento, CA. 95814
Re: City of Dublin Support
Fairway Senior Housing Project, Dublin, CA
Dear Ms. Weir:
To help maximize the number of affordable units in the Fairway Senior Housing Project, the City of
Dublin has agreed to provide financial assistance to the Project by (a) providing a loan to support the
development of the Project; and (b) waiving a future commercial linkage fee on Dublin Ranch
commercial development. These forms of assistance will enable this much needed Project to provide
50% of its units to very low and low income tenants, and 30% of its units to moderate income tenants.
The terms of the City loan and the commercial linkage fee waiver are summarized below.
City Loan
As documented in the Loan Commitment Letter executed by the Developer and the City of Dublin, the
City has agreed to provide financial assistance in the form of a loan from the City's Inclusionary Zoning
In-Lieu Fee Fund in the principal amount of $2,225,000 to support the development of the Project and
increase and improve the supply of housing available in the community to very low, low and moderate
income households. The loan will be funded at construction loan closing and remain in place during the
projected construction, lease-up and attainment of stabilized operations and permanent loan funding
phases of the project. A below-market rate of three percent simple interest will accrue on the
outstanding principal balance. The entire outstanding principal balance and accrued interest are payable
in full at maturity.
ATTACHMENT lA
Commercial Linkage Fee Waiver
As documented in the Development Agreement executed by the Developer and approved by the City of
Dublin, because the Developer is providing affordable units substantially in excess of those required
under the City's Inclusionary Zoning Ordinance, the City of Dublin has agreed to exempt commercial
development in Dublin Ranch from the payment of any commercial linkage fee or similar fee that the
City may adopt which requires payment of a housing fee in connection with the development of such
property for commercial use. This waiver is contingent upon the completion of the Project and
compliance with the affordability and other requirements set forth in the Development Agreement. The
City's financial consultant, CSG Advisors, has estimated the value of this future fee waiver to be
approximately $1,000,000.
The City of Dublin strongly supports this important project. Please feel free to call me with any
questions you may have regarding this matter.
Sincerely,
Mayor
City of Dublin
Area Code (925) · City Manager 833-6650 - City Council 833-6650 · Personnel 833-6605 · Economic Development 833-6650
Finance 833-6640 · Public Works/Engineering 833-6630 · Parks & Community Services 833-6645 · Police 833-6670
Planning/Housing/Code Enforcement 833-6610 - Building Inspection 833-6620 - Fire Prevention Bureau 833-6606
CITY OF DUBLIN
100 Civic Plaza, Dublin, California 94568 Website: http://www.ci.dublin.ca.us
July 15, 2003
Ms. Laurie Weir, Executive Director
California Debt Limit Allocation Committee
915 Capitol Mall, Room 308
Sacramento, CA. 95814
Re: City of Dublin Support
Fairway Family Housing Project, Dublin, CA
Dear Ms. Weir:
To help maximize the number of affordable units in the Fairway Family Housing Project, the City of
Dublin has agreed to provide financial assistance to the Project by (a) providing a loan to support the
development of the Project; and (b) waiving a future commercial linkage fee on Dublin Ranch
commercial development. These forms of assistance will enable this much needed Project to provide
50% of its units to very low and low income tenants, and 30% of its units to moderate income tenants.
The terms of the City loan and the commercial linkage fee waiver are summarized below.
City Loan
As documented in the Loan Commitment Letter executed by the Developer and the City of Dublin, the
City has agreed to provide financial assistance in the form of a loan from the City's Inclusionary Zoning
In-Lieu Fee Fund in the principal amount of $2,225,000 to support the development of the Project and
increase and improve the supply of housing available in the community to very low, low and moderate
income households. The loan will be funded at construction loan closing and remain in place during the
projected construction, lease-up and attainment of stabilized operations and permanent loan funding
phases of the project. A below-market rate of three percent simple interest will accrue on the
outstanding principal balance. The entire outstanding principal balance and accrued interest are payable
in full at maturity.
ATTACHMENT lB
Commercial Linkage Fee Waiver
As documented in the Development Agreement executed by the Developer and approved by the City of
Dublin, because the Developer is providing affordable units substantially in excess of those required
under the City's Inclusionary Zoning Ordinance, the City of Dublin has agreed to exempt commercial
development in Dublin Ranch from the payment of any commercial linkage fee or similar fee that the
City may adopt which requires payment of a housing fee in connection with the development of such
property for commercial use. This waiver is contingent upon the completion of the Project and
compliance with the affordability and other requirements set forth in the Development Agreement. The
City's financial consultant, CSG Advisors, has estimated the value of this future fee waiver to be
approximately $1,000,000.
The City of Dublin strongly supports this important project. Please feel free to call me with any
questions you may have regarding this matter.
Sincerely,
Mayor
City of Dublin
Area Code (925) · City Manager 833-6650 · City Council 833-6650 · Personnel 833-6605 - Economic Development 833-6650
Finance 833-6640 · Public Works/Engineering 833-6630 · Parks & Community Services 833-6645 · Police 833-6670
Planning/Housing/Code Enforcement 833-6610 - Building Inspection 833-6620 - Fire Prevention Bureau 833-6606
RESOLUTION NO. - 03
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
AUTHORIZING TWO LOAN COMMITMENTS FOR FAIRWAY RANCH
WHEREAS, the City Council finds that there is a severe shortage of housing affordable to lower-
income households in the City of Dublin; and
WHEREAS, the development of affordable housing in the City of Dublin will serve a public
purpose; and
WHEREAS, the Fairway Ranch project will provide 162 affordable units in excess of the
affordable units required for the site; and
WHEREAS, the Fairway Ranch development will now be applying for tax-exempt bond
allocations for the Senior project and for the Multi-Family project; and
WHEREAS, the developer's application to the California Debt Limit Allocation Committee will
receive more favorable consideration if the Committee knows that the City of Dublin will be contributing
financially toward this project; and
WHEREAS, the City of Dublin is willing and able to provide a loan of up to $2,250,000 for the
Fairway Ranch Senior Project from the Inclusionary Housing In Lieu Fund; and
WHEREAS, the City of Dublin is willing and able to provide a loan of up to $2,250,000 for the
Fairway Ranch Multi-Family Project from the Inclusionary Housing In Lieu Fund.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin, a
Municipal Corporation, approves the Loan Commitment letter for the Fairway Ranch Senior Project; and
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin,
Municipal Corporation, approves the Loan Commitment letter for the Fairway Ranch Multi-Family
Project.
FURTHER RESOLVED, that the City Council authorizes and directs the Mayor to sign both of
these letters substantially in the form, attached hereto as Exhibit A1 and A2 and to undertake such further
action as may be necessary and desirable to carry out the intent of this resolution.
PASSED, APPROVED, AND ADOPTED this 1st day of July 2003.
AYES:
NOES:
ABSENT:
ABSTAIN:
Mayor
ATTEST:
City Clerk
DRAFT
LOAN COMMITMENT
,2003
RE: Fairway Ranch - Senior Housing
Dear :
When accepted by Dublin Ranch Holdings, LLC, a Delaware limited liability company
("Dublin Ranch Holdings"), this letter (hereafter "Commitment" or "Commitment
Letter"), the terms of which were approved by the City Council of the City of Dublin,
California ("City") by Resolution No. __ adopted 2003, shall constitute
the commitment of City to make a loan (the "Loan") from City's Inclusionary Zoning In-
Lieu Fee Fund in the amount and subject to the terms, conditions, and provisions set forth
herein.
1. Borrower, Manager/General Partner; Assignment. Subject to Paragraph 16 hereof,
Dublin Ranch Holdings shall be permitted to assign its rights hereunder to Dublin Ranch
Senior Apartments, L.P., a limited partnership to be organized under the laws of the State
of California (hereafter "Dublin Ranch Senior Project Partnership") for the purpose of
developing the Senior Housing Project (as defined below). The Manager/Managing
Member of Dublin Ranch Holdings is James Tong. The general partner of Dublin Ranch
Senior Project Partnership shall be ., a limited liability company to be
formed under the laws of the State of Prior to the assignment described
in this Paragraph, the term "Borrower" as used herein shall mean Dublin Ranch
Holdings, and the term "General Partner" as used herein shall mean James Tong, in his
capacity as Manager/Managing Member of Dublin Ranch Holdings. Following such
assignment, the term "Borrower" as used herein shall mean Dublin Ranch Senior Project
Partnership, and the term "General Partner" as used herein shall mean the general
partner of Dublin Ranch Senior Project Partnership.
2. Loan Amount. The amount of the Loan shall be Two Million Two Hundred and
Fifty Thousand Dollars ($2,250,000).
3. Loan Term. The Loan shall be for a term of six (6) years commencing on the date
of first disbursement of the Loan ("Initial Disbursement Date").
4. Repayment. The Loan will be repaid in three equal installments of principal,
th th th
together With interest accrued thereon, on the 4 , 5 and 6 anniversary of the Initial
Disbursement Date.
5. Interest Rate. Three percent (3%) simple interest per annum shall accrue on the
outstanding principal balance of the Loan.
633107-5
6. Prepayment. The Loan may be prepaid in whole or in part without penalty or
premium. The effectiveness of the Affordable Housing Regulatory Agreement and the
CC&Rs (each as described below) shall survive any such prepayment.
7. Use of Proceeds. The Loan proceeds shall be used exclusively to pay for third-party
construction costs Borrower incurs to construct very low-, low- and moderate-income
units constructed as part of the senior housing development (hereafter referred to as the
"Senior Housing Project") that Borrower shall develop on the property (the
"Property") that is the subject of that certain Development Agreement - Fairway Ranch
Senior Housing Component dated as of ,2003, and executed by and
between City and Dublin Ranch Holdings or its predecessor(s) in interest (the "Senior
Housing Development Agreement").
8. Collateral. The Loan shall be secured by a first deed of trust (the "Deed of
Trust") on certain real property (the "Collateral Property") commonly known as Parcel
9 of Tract 7148, Dublin, California, together with improvements that may be constructed
thereon and all equipment, personal property and fixtures that may be located thereon.
The Collateral Property is owned by Chang Su-O-Lin, Hong Lien Lin and Hong Yao Lin,
each of whom shall execute the Deed of Trust. The Deed of Trust shall also secure any
loan the City may provide in connection with the development of multi-family housing
on the property that is the subject of that certain Development Agreement - Fairway
Ranch Multi-Family Component dated as of _, 2003, and executed by and
between City and Dublin Ranch Holdings or its predecessor(s) in interest.
The Collateral Property shall be subject to no mortgage, lien or claim other than liens for
which the City has provided written consent and which: (a) are subordinate to the Deed
of Trust, (b) secure repayment of obligations incurred solely in connection with the
financing of the Senior Housing Project, the Multi-Family Project or other purposes
approved by City, (c) require notice to the City in the event of default, and (d) do not in
the aggregate together with all other outstanding liens result in encumbrance of the
Collateral Property in excess of 60% of its fair market value.
Borrower may provide substitute collateral reasonably acceptable to City in the form of
real property located within the City of Dublin, provided that: (i) in City's reasonable
determination, the fair market value of such substitute collateral is at least three times the
value of the outstanding balance of Borrower's obligations to City to be secured thereby;
(ii) Borrower pays all reasonable expenses City incurs in connection with City's review
and investigation of the condition and value of such property; (iii) City's lien securing
Borrower's obligations is a first lien on such property; and (iv) any subordinate liens on
such property meet the requirements of the second paragraph of this Paragraph 8.
9. Limitation of Liability. The Loan shall be non-recourse as to payment of principal
and interest; Borrower's obligation to repay the Loan shall be secured by the Collateral
Property.
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10. Documents. City's commitment to make the Loan described in this Commitment
Letter is subject to the condition that Borrower and Chang Su-O-Lin, Hong Lien Lin and
Hong Yao Lin (collectively hereafter, the "Lins" or the "Indemnitors"), as applicable,
shall duly execute, acknowledge and deliver to City all documents required to evidence
and secure repayment of the Loan, which documents shall be in form and substance
satisfactory to the City Manager and the City Attorney, and which shall include, without
limitation, the following documents (collectively, the "Loan Documents"):
(a) a Development Agreement for Dublin Ranch Area B, executed by City and by
Dublin Ranch Holdings or its predecessor(s) in interest as owner of Dublin Ranch Area B
("Development Agreement-Fairway Ranch") which shall describe the conditions of
development for such property, including conditions related to compliance with City's
Inclusionary Zoning Ordinance and the phasing of development for such property;
(b) the Senior Housing Development Agreement, executed by City and by Dublin
Ranch Holdings or its predecessor(s) in interest as owner of the Property, which shall
describe the conditions of development for the Property including conditions relating to
compliance with City's Inclusionary Zoning Ordinance, and which shall be assigned to
Borrower prior to the closing of the Loan ("Closing");
(c) an Affordable Housing Regulatory Agreement, executed by Borrower, which
shall provide that of the units developed within the Senior Housing Project, 64 shall be
made available at affordable rents to very low-income households, 97 shall be made
available at affordable rents to low-income households, and 131 shall be made available
at affordable rents to moderate-income households (collectively the "Affordability
Restrictions"). The Affordable Housing Regulatory Agreement shall be recorded
against the Property, shall be binding upon Borrower's successors in interest for a term of
55 years, and shall not be subordinated to any interest, lien, lease, ground lease or
mortgage recorded against the Property other than the CC&R's, the Development
Agreement-Fairway Ranch, the Senior Housing Development Agreement, and the Master
Development Agreement between City and the Lins for the Dublin Ranch Project (Areas
A, B, C, D, E, F, G and H) ("Master Development Agreement"); provided however, if
CC&Rs (as described below) are recorded against the Property in accordance with all
conditions described in subparagraph (d) of this Paragraph 10, the Affordable Housing
Regulatory Agreement may be subordinated to the interests and rights of senior lenders
providing financing for the Senior Housing Project in a manner customary for a Fannie
Mae or Freddie Mac credit enhanced tax-exempt bond transaction if so required;
(d) a Declaration of Covenants, Conditions and Restrictions ("CC&Rs") which
shall impose the Affordability Restrictions, executed by the owner(s) of the Property for
the benefit of City. The CC&Rs: (i) shall be recorded against the Property, (ii) shall be
binding upon Borrower's successors in interest for a term of 55 years, (iii) shall provide
that City shall have the right to enforce the provisions thereof, (iv) shall provide that any
amendments thereto or rescission thereof shall require the consent of City, and (v) shall
not be subordinated to any other interest, lien, lease, ground lease or mortgage recorded
633107-5 3
against the Property other than the Development Agreement-Fairway Ranch, the Senior
Housing Development Agreement, and the Master Development Agreement;
(e) a Loan Agreement, executed by City and Borrower, and approved by the Lins
as owners of the Collateral Property, which shall describe the conditions under which the
Loan proceeds may be disbursed consistent with the terms of this Commitment Letter;
(f) a Promissory Note in the amount of the Loan, executed by Borrower;
(g) a Deed of Trust, executed by the Lins as owners of the Collateral Property,
which shall secure repayment of the Loan and which shall be recorded as a first lien on
the Collateral Property;
(h) an Environmental Indemnity Agreement, executed by the Borrower and the
Indemnitors, which shall provide for the indemnification of City against all claims or
liability arising in connection with the presence of hazardous materials on the Collateral
Property or the Property or the violation of any environmental law, rule or regulation
applicable thereto;
(i) a General Indemnity Agreement, executed by Borrower and the Indemnitors,
which shall provide for the indemnification of City against liability arising in connection
with the breach of Borrower's or the Indemnitors' representations, warranties and
covenants (other than Borrower's payment obligations) made in connection with the
Loan. The terms and scope of the General Indemnity Agreement shall be comparable to
that required by other lenders or investors providing financing to the Senior Housing
Project.
11. Additional Deliveries. City's obligation to make the Loan is subject to the condition
that City shall have received each of the following, in form and substance satisfactory to
City no later than 30 days prior to Closing unless otherwise specified herein:
(a) Evidence of Funding. Evidence of funding commitments sufficient to fully
finance the construction and permanent financing of the Senior Housing Project;
(b) Senior Housing Project Budget. Borrower shall deliver to City a budget for
development of the Senior Housing Project ("Senior Housing Project Budget") which
shall show all sources and uses of funds for construction and permanent financing of the
Senior Housing Project.
(c) Appraisal. At Borrower's expense, if City so elects, City may select and
engage an appraiser to provide a valuation of the Collateral Property or any substitute
collateral proposed by Borrower.
(d) Environmental Reports. Borrower shall deliver to City a Phase I
environmental report for (i) the Property, and (ii) the Collateral Property. If such
633107-5 4
environmental reports are not satisfactory to City, City may request further environmental
testing to be conducted at Borrower's expense, or may terminate this Commitment.
(e) Financial Statements. Borrower shall furnish to City operating pro formas for
the Senior Housing Project in such form and detail as City reasonably requests.
(f) Title Insurance. Borrower shall provide to City a commitment to issue a
CLTA Lender's title insurance policy in the full amount of the Loan (together with all
other obligations secured by the Deed of Trust) in form and substance acceptable to City,
insuring that the lien of the Deed of Trust, when recorded against the Collateral Property,
shall be subject to only such exceptions as approved by City and which shall include such
endorsements as requested by City ("Title Insurance Commitment"). The Title
Insurance Commitment will be issued by a title insurer approved by City. On the Closing
Date, Borrower will provide to City a title insurance policy issued pursuant to the Title
Insurance Commitment.
(g) Reserved.
(h) Plans and Specifications; Building Permits: Licenses. Borrower shall provide
a complete set of the final plans and specifications for the Senior Housing Project for
approval by City, and Borrower shall obtain all building permits and other approvals
necessary for the Senior Housing Project. Borrower shall provide evidence to City that
all governmental permits and approvals required for the Senior Housing Project have
been obtained from the appropriate agencies.
(i) Construction Contract; Bonds. Borrower will provide City with a guaranteed
maximum price general construction contract in an amount no greater than the amount
indicated by the Senior Housing Project Budget, together with payment and performance
bonds with a dual obligee rider in favor of City. The general contractor, the form and
content of the general contract and the form and content of the bonds must be acceptable
to City.
(j) Ground Lease. Borrower shall provide to City a copy of the ground lease
for the Property, executed by and between Borrower as lessee and the owner(s) of the
Property as lessor.
(k) Insurance. City shall be named as an additional insured on all insurance
policies required by lenders or investors providing financing for the Senior Housing
Project, and all such policies shall provide that City will receive not less than thirty (30)
days' written notice prior to cancellation.
(1) Management Contract and Management Firm. Borrower shall provide a copy
of the proposed management contract for the Senior Housing Project together with such
information about the proposed management firm, including without limitation a
description of the management firm's experience with similar projects, staffing and
qualifications, as City may reasonably request. The management contract shall describe
633107-5
the services to be provided by the management firm, including without limitation,
marketing, tenant qualification and certification, maintenance and repairs.
(m) Marketing and Management Plan. Borrower shall provide City with a copy
of a proposed marketing and management plan for the Senior Housing Project which
shall address how Borrower proposes to (1) manage and maintain the Senior Housing
Project, (2) market the affordable units in the Senior Housing Project to eligible
households in accordance with the selection criteria specified in the City's Inclusionary
Zoning Regulations, and (3) certify the eligibility of eligible senior households.
(n) Authorizations; Good Standing. Borrower shall provide City with the
following:
For Borrower: (i) a certified copy of Borrower's partnership agreement together
with a Certificate of Good Standing and LP-1 indicating that Borrower is properly
organized and authorized to do business in the State of California; (ii) a certified
resolution indicating that Borrower has authorized this transaction and that the persons
executing the Loan Documents on Borrower's behalf have been duly authorized to do so.
If Borrower is organized in a form other than a limited partnership, Borrower shall
provide counterpart organizational documents and certificates applicable to such
organizational form.
For Borrower's General Partner: (i) Certificate of Formation/Articles of
Organization certified by the Secretary of State; (ii) operating agreement certified by the
Manager/Managing Member of the company; (iii) Certificate of Good Standing issued by
the Secretary of State; (iv) certified resolution indicating that the General Partner has
authorized this transaction and that the persons executing the Loan Documents on the
General Partner's behalf have been duly authorized to do so. If Borrower is organized in
a form other than a limited partnership, or if Borrower's General Partner is organized in a
form other than a limited liability company, Borrower shall provide counterpart
organizational documents and certificates applicable to such organizational forms.
(o) Legal Opinion. Borrower shall provide City with an opinion of Borrower's
counsel which shall provide that Borrower and Borrower's General Partner are duly
organized, validly existing and authorized to do business in the State of California, that
each of the Loan Documents has been duly authorized and executed and when delivered
shall be the binding obligations of the owner of the Property, Borrower and/or the
Indemnitors, as applicable, enforceable in accordance with their respective terms.
12. Adverse Change. This Commitment is made in reliance on information provided by
or on behalf of Borrower, Borrower's General Partner, and the Indemnitors. Each such
party hereby represents and warrants that such information is accurate and complete in all
material respects. If any information which has been or is hereafter supplied to City in
connection with the Loan, the Collateral Property or the Senior Housing Project becomes
inaccurate or incomplete in any material respect, Borrower shall immediately notify City
in writing prior to the Closing Date. City's obligation to close the Loan is conditioned on
633107-5 6
the absence of any material adverse change in the financial condition or prospects of
Borrower, Borrower's General Partner, or the Indemnitors or the condition of the
Collateral Property.
13. Expiration Date. This Commitment shall be considered accepted by Borrower upon
delivery to the City of a signed original of this letter. The executed Commitment Letter
shall be delivered to the City no later than September 1, 2003, or this Commitment Letter
will be null and void. This Commitment and City's obligation to fund the Loan shall
expire on December 31, 2005, if Borrower has not received an allocation for the issuance
of tax-exempt bonds for the Senior Housing Project by such date.
14. Closing Date. The Loan shall close and be funded simultaneously with the closing
for and funding of construction financing for the Senior Housing Project, the issuance of
tax-exempt bonds for the Senior Housing Project, and the pay-in of equity contributions
from the tax credit investors pursuant to the approved Senior Housing Project Budget.
The Loan must be closed on or before ,20___, or such later date as is
mutually approved by City and Borrower. If the Closing Date does not occur prior to
such date, City's obligations under this Commitment will terminate automatically and
without notice.
15. Entire Agreement. This Commitment, together with the Loan Documents,
constitutes the entire agreement between City and Borrower with respect to the subject
matter hereof, and no prior discussions, correspondence or documents will be considered
to vary or explain the terms of this Commitment. All conditions and requirements set
forth in this Commitment are material to City, and except as specified herein, must be
satisfied by Borrower prior to the Closing Date.
16. Assignment; Amendment. Neither this Commitment nor the Loan proceeds may be
assigned without City's prior written consent, and without such consent there will be no
right to designate a payee of the Loan proceeds. Any attempt at assignment without such
consent will be void. This Commitment cannot be amended orally, but only by an
instrument in writing signed by the party against whom enforcement of any change is
sought.
17. Waivers. City, in its sole discretion, may waive, in writing, certain Commitment
conditions; however, waiver of any condition or requirement shall not be construed as
waiver of any other provision(s) of this Commitment.
18. Default. Failure by Borrower to fully comply with all of the Commitment conditions
within the times herein required will constitute a default by Borrower hereunder and,
unless waived by City in writing, will automatically cause this Commitment to terminate.
In no event will inaction by City be deemed a waiver of any requirement hereunder or
any default by Borrower. City reserves the right to cancel this Commitment in the event
of any material misrepresentation made in any information furnished to City by or on
behalf of Borrower, Borrower's General Partner or the Indemnitors.
633107-5 7
19. Property Inspection. Borrower agrees that, until such time as the Loan is paid in full,
City shall have the right to inspect the Senior Housing Project, the Property and the
Collateral Property at any time upon reasonable notice.
20. Bankruptcy/Insolvency. In the event of bankruptcy or insolvency of Borrower,
Borrower's General Partner, or any Indemnitor, whether voluntarily or involuntarily, this
Commitment shall terminate.
21. Legal Actions. Borrower, Borrower's General Partner and the Indemnitors hereby
represent and warrant that there is no litigation, prosecution, investigation, or proceeding
of any nature whatsoever now pending or overtly threatened in writing against Borrower,
the manager or members of Dublin Ranch Holdings, Borrower's General Partner, or any
Indemnitor that seeks to affect the enforceability of any of the Loan Documents or is
likely to adversely affect the ability of Borrower to pay and perform the obligations of
Borrower to City thereunder or the ability of any Indemnitor to perform its obligations
thereunder.
22. Property; Collateral Property. Dublin Ranch Holdings and the Manager/Managing
Member thereof hereby represent and warrant that Dublin Ranch Holdings is the owner
in fee simple of the Property and that it has all due authority to execute the CC&Rs which
shall be recorded against the Property subject to no prior claim, lien or interest. The Lins
hereby represent and warrant that they are the owners in fee simple of the Collateral
Property, that such property has a fair market value of at least $13.5 million, and that they
have authority to execute the Deed of Trust which shall be a first lien on the Collateral
Property.
23. Costs. Borrower shall be responsible for all costs of Closing including, but not
limited to title insurance, recording fees, escrow fees, the cost of appraisals, surveys and
other items Borrower is required to deliver to City hereunder. Whether or not the Loan
is closed, all expenses incurred by City in connection with the Loan, including without
limitation, reasonable expenses of City's legal counsel and financial advisor, shall be paid
by Borrower or the Indemnitors.
24. Liability. No member, officer, agent, or employee of City shall be liable personally
concerning any matters arising out of or in relation to the undertaking or obligations set
forth in this Commitment Letter.
Dated as of this day of ., 2003.
CITY OF DUBLIN
By:
City Manager
Approved as to Form:
City Attorney
633107-5
The attached Loan Commitment Letter dated as of ,2003, executed by the
City of Dublin for the Fairway Ranch Senior Housing Project is hereby accepted.
Dated: ., 2003.
BORROWER
DUBLIN RANCH HOLDINGS, LLC,
a Delaware limited liability company
By:
James Tong
Its: Manager
DUBLIN RANCH SENIOR APARTMENTS, L.P.
a California limited partnership
By: ., a limited liability company
Its: General Partner
By:
Its:
GENERAL PARTNER
, a limited liability company
By:
Its:
INDEMNITORS
Chang Su-O-Lin
Hong Lien Lin
Hong Yao Lin
633107-5 9
DRAFT
LOAN COMMITMENT
,2003
RE: Fairway Ranch - Multi-Family Housing
Dear :
When accepted by Dublin Ranch Holdings, LLC, a Delaware limited liability company
("Dublin Ranch Holdings"), this letter (hereafter "Commitment" or "Commitment
Letter"), the terms of which were approved by the City Council of the City of Dublin,
California ("City") by Resolution No. __ adopted 2003, shall constitute
the commitment of City to make a loan (the "Loan") from City's Inclusionary Zoning In-
Lieu Fee Fund in the amount and subject to the terms, conditions, and provisions set forth
herein.
1. Borrower, Manager/General Partner; Assignment. Subject to Paragraph 16 hereof,
Dublin Ranch Holdings shall be permitted to assign its rights hereunder to Fairway
Family Community, L.P., a limited partnership to be organized under the laws of the
State of California (hereafter "Fairway Multi-Family Partnership") for the purpose of
developing the Multi-Family Housing Project (as defined below). The
Manager/Managing Member of Dublin Ranch Holdings is James Tong. The general
partner of Fairway Multi-Family Parmership shall be Charter Properties, a California
corporation. Prior to the assignment described in this Paragraph, the term "Borrower" as
used herein shall mean Dublin Ranch Holdings, and the term "General Partner" as used
herein shall mean James Tong, in his capacity as Manager/Managing Member of Dublin
Ranch Holdings. Following such assignment, the term "Borrower" as used herein shall
mean Fairway Multi-Family Partnership, and the term "General Partner" as used herein
shall mean the general partner of Fairway Multi-Family Partnership.
2. Loan Amount. The amount of the Loan shall be Two Million Two Hundred and
Fifty Thousand Dollars ($2,250,000).
3. Loan Term. The Loan shall be for a term of six (6) years commencing on the date
of first disbursement of the Loan ("Initial Disbursement Date").
4. Repayment. The Loan will be repaid in three equal installments of principal,
th th th
together With interest accrued thereon, on the 4 , 5 and 6 anniversary of the Initial
Disbursement Date.
5. Interest Rate. Three percent (3%) simple interest per annum shall accrue on the
outstanding principal balance of the Loan.
6. Prepayment. The Loan may be prepaid in whole or in part without penalty or
premium. The effectiveness of the Affordable Housing Regulatory Agreement and the
CC&Rs (each as described below) shall survive any such prepayment.
7. Use of Proceeds. The Loan proceeds shall be used exclusively to pay for third-party
construction costs Borrower incurs to construct very low-, low- and moderate-income
units constructed as part of the multi-family housing development (hereafter referred to
as the "Multi-Family Housing Project") that Borrower shall develop on the property
(the "Property") that is the subject of that certain Development Agreement - Fairway
Ranch Multi-Family Housing Component dated as of ., 2003, and
executed by and between City and Dublin Ranch Holdings or its predecessor(s) in
interest (the "Multi-Family Housing Development Agreement").
8. Collateral. The Loan shall be secured by a first deed of trust (the "Deed of
Trust") on certain real property (the "Collateral Property") commonly known as Parcel
9 of Tract 7148, Dublin, California, together with improvements that may be constructed
thereon and all equipment, personal property and fixtures that may be located thereon.
The Collateral Property is owned by Chang Su-O-Lin, Hong Lien Lin and Hong Yao Lin,
each of whom shall execute the Deed of Trust. The Deed of Trust shall also secure any
loan the City may provide in connection with the development of senior housing ("Senior
Housing Project") on the property that is the subject of that certain Development
Agreement - Fairway Ranch Senior Housing Component dated as of .,
2003, and executed by and between City and Dublin Ranch Holdings or its predecessor(s)
in interest.
The Collateral Property shall be subject to no mortgage, lien or claim other than liens for
which the City has provided written consent and which: (a) are subordinate to the Deed
of Trust, (b) secure repayment of obligations incurred solely in connection with the
financing of the Multi-Family Housing Project, the Senior Housing Project or other
purposes approved by City, (c) require notice to the City in the event of default, and (d)
do not in the aggregate together with all other outstanding liens result in encumbrance of
the Collateral Property in excess of 60% of its fair market value.
Borrower may provide substitute collateral reasonably acceptable to City in the form of
real property located within the City of Dublin, provided that: (i) in City's reasonable
determination, the fair market value of such substitute collateral is at least three times the
value of the outstanding balance of Borrower's obligations to City to be secured thereby;
(ii) Borrower pays all reasonable expenses City incurs in connection with City's review
and investigation of the condition and value of such property; (iii) City's lien securing
Borrower's obligations is a first lien on such property; and (iv) any subordinate liens on
such property meet the requirements of the second paragraph of this Paragraph 8.
9. Limitation of Liability. The Loan shall be non-recourse as to payment of principal
and interest; Borrower's obligation to repay the Loan shall be secured by the Collateral
Property.
647196-1 2
10. Documents. City's commitment to make the Loan described in this Commitment
Letter is subject to the condition that Borrower and Chang Su-O-Lin, Hong Lien Lin and
Hong Yao Lin (collectively hereafter, the "Lins" or the "Indemnitors"), as applicable,
shall duly execute, acknowledge and deliver to City all documents required to evidence
and secure repayment of the Loan, which documents shall be in form and substance
satisfactory to the City Manager and the City Attorney, and which shall include, without
limitation, the following documents (collectively, the "Loan Documents"):
(a) a Development Agreement for Dublin Ranch Area B, executed by City and by
Dublin Ranch Holdings or its predecessor(s) in interest as owner of Dublin Ranch Area B
("Development Agreement-Fairway Ranch") which shall describe the conditions of
development for such property, including conditions related to compliance with City's
Inclusionary Zoning Ordinance and the phasing of development for such property;
(b) the Multi-Family Housing Development Agreement, executed by City and by
Dublin Ranch Holdings or its predecessor(s) in interest as owner of the Property, which
shall describe the conditions of development for the Property including conditions
relating to compliance with City's Inclusionary Zoning Ordinance, and which shall be
assigned to Borrower prior to the closing of the Loan ("Closing");
(c) an Affordable Housing Regulatory Agreement, executed by Borrower, which
shall provide that of the units developed within the Multi-Family Housing Project, 63
shall be made available at affordable rents to very low-income households, 90 shall be
made available at affordable rents to Iow-income households, and 90 shall be made
available at affordable rents to moderate-income households (collectively the
"Affordability Restrictions"). The Affordable Housing Regulatory Agreement shall be
recorded against the Property, shall be binding upon Borrower's successors in interest for
a term of 55 years, and shall not be subordinated to any interest, lien, lease, ground lease
or mortgage recorded against the Property other than the CC&R's, the Development
Agreement-Fairway Ranch, the Multi-Family Housing Development Agreement, and the
Master Development Agreement between City and the Lins for the Dublin Ranch Project
(Areas A, B, C, D, E, F, G and H) ("Master Development Agreement"); provided
however, if CC&Rs (as described below) are recorded against the Property in accordance
with all conditions described in subparagraph (d) of this Paragraph 10, the Affordable
Housing Regulatory Agreement may be subordinated to the interests and rights of senior
lenders providing financing for the Multi-Family Housing Project in a manner customary
for a Fannie Mae or Freddie Mac credit enhanced tax-exempt bond transaction if so
required;
(d) a Declaration of Covenants, Conditions and Restrictions ("CC&Rs") which
shall impose the Affordability Restrictions, executed by the owner(s) of the Property for
the benefit of City. The CC&Rs: (i) shall be recorded against the Property, (ii) shall be
binding upon Borrower's successors in interest for a term of 55 years, (iii) shall provide
that City shall have the right to enforce the provisions thereof, (iv) shall provide that any
amendments thereto or rescission thereof shall require the consent of City, and (v) shall
not be subordinated to any other interest, lien, lease, ground lease or mortgage recorded
647196-1 3
against the Property other than the Development Agreement-Fairway Ranch, the Multi-
Family Housing Development Agreement, and the Master Development Agreement;
(e) a Loan Agreement, executed by City and Borrower, and approved by the Lins
as owners of the Collateral Property, which shall describe the conditions under which the
Loan proceeds may be disbursed consistent with the terms of this Commitment Letter;
(f) a Promissory Note in the amount of the Loan, executed by Borrower;
(g) a Deed of Trust, executed by the Lins as owners of the Collateral Property,
which shall secure repayment of the Loan and which shall be recorded as a first lien on
the Collateral Property;
(h) an Environmental Indemnity Agreement, executed by the Borrower and the
Indemnitors, which shall provide for the indemnification of City against all claims or
liability arising in connection with the presence of hazardous materials on the Collateral
Property or the Property or the violation of any environmental law, rule or regulation
applicable thereto;
(i) a General Indemnity Agreement, executed by Borrower and the Indemnitors,
which shall provide for the indemnification of City against liability arising in connection
with the breach of Borrower's or the Indemnitors' representations, warranties and
covenants (other than Borrower's payment obligations) made in connection with the
Loan. The terms and scope of the General Indemnity Agreement shall be comparable to
that required by other lenders or investors providing financing to the Multi-Family
Housing Project.
11. Additional Deliveries. City's obligation to make the Loan is subject to the condition
that City shall have received each of the following, in form and substance satisfactory to
City no later than 30 days prior to Closing unless otherwise specified herein:
(a) Evidence of Funding. Evidence of funding commitments sufficient to fully
finance the construction and permanent financing of the Multi-Family Housing Project;
(b) Multi-Family Housing Project Budget. Borrower shall deliver to City a
budget for development of the Multi-Family Housing Project ("Multi-Family Housing
Project Budget") which shall show all sources and uses of funds for construction and
permanent financing of the Multi-Family Housing Project.
(c) Appraisal. At Borrower's expense, if City so elects, City may select and
engage an appraiser to provide a valuation of the Collateral Property or any substitute
collateral proposed by Borrower.
(d) Environmental Reports. Borrower shall deliver to City a Phase I
environmental report for (i) the Property, and (ii) the Collateral Property. If such
647196-1 4
environmental reports are not satisfactory to City, City may request further environmental
testing to be conducted at Borrower's expense, or may terminate this Commitment.
(e) Financial Statements. Borrower shall furnish to City operating pro formas for
the Multi-Family Housing Project in such form and detail as City reasonably requests.
(f) Title Insurance. Borrower shall provide to City a commitment to issue a
CLTA Lender's title insurance policy in the full amount of the Loan (together with all
other obligations secured by the Deed of Trust) in form and substance acceptable to City,
insuring that the lien of the Deed of Trust, when recorded against the Collateral Property,
shall be subject to only such exceptions as approved by City and which shall include such
endorsements as requested by City ("Title Insurance Commitment"). The Title
Insurance Commitment will be issued by a title insurer approved by City. On the Closing
Date, Borrower will provide to City a title insurance policy issued pursuant to the Title
Insurance Commitment.
(g) Reserved.
(h) Plans and Specifications; Building Permits; Licenses. Borrower shall provide
a complete set of the final plans and specifications for the Multi-Family Housing Project
for approval by City, and Borrower shall obtain all building permits and other approvals
necessary for the Multi-Family Housing Project. Borrower shall provide evidence to
City that all governmental permits and approvals required for the Multi-Family Housing
Project have been obtained from the appropriate agencies.
(i) Construction Contract; Bonds. Borrower will provide City with a guaranteed
maximum price general construction contract in an amount no greater than the amount
indicated by the Multi-Family Housing Project Budget, together with payment and
performance bonds with a dual obligee rider in favor of City. The general contractor, the
form and content of the general contract and the form and content of the bonds must be
acceptable to City.
(j) Ground Lease. Borrower shall provide to City a copy of the ground lease
for the Property, executed by and between Borrower as lessee and the owner(s) of the
Property as lessor.
(k) Insurance. City shall be named as an additional insured on all insurance
policies required by lenders or investors providing financing for the Multi-Family
Housing Project, and all such policies shall provide that City will receive not less than
thirty (30) days' written notice prior to cancellation.
(1) Management Contract and Management Firm. Borrower shall provide a copy
of the proposed management contract for the Multi-Family Housing Project together
with such information about the proposed management firm, including without limitation
a description of the management firm's experience with similar projects, staffing and
qualifications, as City may reasonably request. The management contract shall describe
647196-1 5
the services to be provided by the management firm, including without limitation,
marketing, tenant qualification and certification, maintenance and repairs.
(m) Marketing and Management Plan. Borrower shall provide City with a copy
of a proposed marketing and management plan for the Multi-Family Housing Project
which shall address how Borrower proposes to (1) manage and maintain the Multi-
Family Housing Project, (2) market the affordable units in the Multi-Family Housing
Project to eligible households in accordance with the selection criteria specified in the
City's Inclusionary Zoning Regulations, and (3) certify the eligibility of eligible
households.
(n) Authorizations; Good Standing. Borrower shall provide City with the
following:
For Borrower: (i) a certified copy of Borrower's partnership agreement together
with a Certificate of Good Standing and LP-1 indicating that Borrower is properly
organized and authorized to do business in the State of California; (ii) a certified
resolution indicating that Borrower has authorized this transaction and that the persons
executing the Loan Documents on Borrower's behalf have been duly authorized to do so.
If Borrower is organized in a form other than a limited partnership, Borrower shall
provide counterpart organizational documents and certificates applicable to such
organizational form.
For Borrower's General Partner: (i) Articles of Incorporation certified by the
Secretary of State; (ii) bylaws certified by the Secretary of the corporation; (iii)
Certificate of Good Standing issued by the Secretary of State; (iv) certified resolution
indicating that the General Partner has authorized this transaction and that the persons
executing the Loan Documents on the General Partner's behalf have been duly authorized
to do so. If Borrower is organized in a form other than a limited partnership, or if
Borrower's General Partner is organized in a form other than a corporation, Borrower
shall provide counterpart organizational documents and certificates applicable to such
organizational forms.
(o) Legal Opinion. Borrower shall provide City with an opinion of Borrower's
counsel which shall provide that Borrower and Borrower's General Partner are duly
organized, validly existing and authorized to do business in the State of California, that
each of the Loan Documents has been duly authorized and executed and when delivered
shall be the binding obligations of the owner of the Property, the Borrower and/or the
Indemnitors, as applicable, enforceable in accordance with their respective terms.
12. Adverse Change. This Commitment is made in reliance on information provided by
or on behalf of Borrower, Borrower's General Partner, and the Indemnitors. Each such
party hereby represents and warrants that such information is accurate and complete in all
material respects. If any information which has been or is hereafter supplied to City in
com~ection with the Loan, the Collateral Property or the Multi-Family Housing Project
becomes inaccurate or incomplete in any material respect, Borrower shall immediately
647196-1 6
/? [
notify City in writing prior to the Closing Date. City's obligation to close the Loan is
conditioned on the absence of any material adverse change in the financial condition or
prospects of Borrower, Borrower's General Partner, or the Indemnitors or the condition
of the Collateral Property.
13. Expiration Date. This Commitment shall be considered accepted by Borrower upon
delivery to the City of a signed original of this letter. The executed Commitment Letter
shall be delivered to the City no later than September 1, 2003, or this Commitment Letter
will be null and void. This Commitment and City's obligation to fund the Loan shall
expire on December 31, 2005, if Borrower has not received an allocation for the issuance
of tax-exempt bonds for the Multi-Family Housing Project by such date.
14. Closing Date. The Loan shall close and be funded simultaneously with the closing
for and funding of construction financing for the Multi-Family Housing Project, the
issuance of tax-exempt bonds for the Multi-Family Housing Project, and the pay-in of
equity contributions from the tax credit investors pursuant to the approved Multi-Family
Housing Project Budget. The Loan must be closed on or before ,
20__, or such later date as is mutually approved by City and Borrower. If the Closing
Date does not occur prior to such date, City's obligations under this Commitment will
terminate automatically and without notice.
15. Entire Agreement. This Commitment, together with the Loan Documents,
constitutes the entire agreement between City and Borrower with respect to the subject
matter hereof, and no prior discussions, correspondence or documents will be considered
to vary or explain the terms of this Commitment. All conditions and requirements set
forth in this Commitment are material to City, and except as specified herein, must be
satisfied by Borrower prior to the Closing Date.
16. Assignment; Amendment. Neither this Commitment nor the Loan proceeds may be
assigned without City's prior written consent, and without such consent there will be no
right to designate a payee of the Loan proceeds. Any attempt at assignment without such
consent will be void. This Commitment cannot be amended orally, but only by an
instrument in writing signed by the party against whom enforcement of any change is
sought.
17. Waivers. City, in its sole discretion, may waive, in writing, certain Commitment
conditions; however, waiver of any condition or requirement shall not be construed as
waiver of any other provision(s) of this Commitment.
18. Default. Failure by Borrower to fully comply with all of the Commitment conditions
within the times herein required will constitute a default by Borrower hereunder and,
unless waived by City in writing, wilt automatically cause this Commitment to terminate.
In no event will inaction by City be deemed a waiver of any requirement hereunder or
any default by Borrower. City reserves the right to cancel this Commitment in the event
of any material misrepresentation made in any information furnished to City by or on
behalf of Borrower, Borrower's General Partner or the Indemnitors.
647196-1 7
19. Property Inspection. Borrower agrees that, until such time as the Loan is paid in full,
City shall have the right to inspect the Multi-Family Housing Project, the ProPerty and
the Collateral Property at any time upon reasonable notice.
20. Bankruptcy/Insolvency. In the event of bankruptcy or insolvency of Borrower,
Borrower's General Partner, or any Indemnitor, whether voluntarily or involuntarily, this
Commitment shall terminate.
21. Legal Actions. Borrower, Borrower's General Partner and the Indemnitors hereby
represent and warrant that there is no litigation, prosecution, investigation, or proceeding
of any nature whatsoever now pending or overtly threatened in writing against Borrower,
the manager or members of Dublin Ranch Holdings, Borrower's General Partner, or any
Indemnitor that seeks to affect the enforceability of any of the Loan Documents or is
likely to adversely affect the ability of Borrower to pay and perform the obligations of
Borrower to City thereunder or the ability of any Indemnitor to perform its obligations
thereunder.
22. Property; Collateral Property. Dublin Ranch Holdings and the Manager/Managing
Member thereof hereby represent and warrant that Dublin Ranch Holdings is the owner
in fee simple of the Property and that it has all due authority to execute the CC&Rs which
shall be recorded against the Property subject to no prior claim, lien or interest. The Lins
hereby represent and warrant that they are the owners in fee simple of the Collateral
Property, that such property has a fair market value of at least $13.5 million, and that they
have authority to execute the Deed of Trust which shall be a first lien on the Collateral
Property.
23. Costs. Borrower shall be responsible for all costs of Closing including, but not
limited to title insurance, recording fees, escrow fees, the cost of appraisals, surveys and
other items Borrower is required to deliver to City hereunder. Whether or not the Loan
is closed, all expenses incurred by City in connection with the Loan, including without
limitation, reasonable expenses of City's legal counsel and financial advisor, shall be paid
by Borrower or the Indemnitors.
24. Liability. No member, officer, agent, or employee of City shall be liable personally
concerning any matters arising out of or in relation to the undertaking or obligations set
forth in this Commitment Letter.
Dated as of this __ day of ,2003.
CITY OF DUBLIN
By:
City Manager
Approved as to Form:
City Attorney
647196-1 8
.... ~,. ,. 6118/2003 11:36 AM Dublin Apartments Pro Forma vadable June 17, 2003 Family(City).xls Data
~'-' -~:'~ ' KLEIN FINANCIAL CORPORATION IALL SCHEDULES ARE SUBJECT TO BOND COUNSEL APPROVAL '
Fairway Ranch Apartments, Dublin CA Phase I
Project Data - Total Project
000's Omitted from $ Amounts)
PROJECT DATA Acres Sq Ft Building Ar~ea
Gross Site Area (estimated) 7.50 326,700
Public Dedications Rentable 244,180
Total Net Site Area 7.50 326,700 Load 10,915 4.28%
I Gross SF 255,095
Start of Projection Jan-04 Jan-04 ~Number of Apartments 304
Residential
I
Preconstruction / Bond Closing Pedod 6 months
Construction Pedod 15 months
Lease-up Period 9 months
Project Seasoning Period 6 months
Renl Concession Period 0 months
Total Period 36
FINANCING ASSUMPTIONS
Hous!nq Bond (~er es iA) Bonrt Costs: % Thou $$ % Thou $$
NOI $ 2,943 Issuance ' 1.17%' ' ' ~,06 Cap Repl. RETAIL 0.75% 0
Stated Amount of Credit Enhancement 12.00% $ 35,251
interest Rate (construction cap) I Variable I 1.700% Legal & Expenses 0.460% 160 CAP REPL APTS $200 (61
Interest Rate (on escrowed bonds) 1.700%
Credit Enhancement (excludes liquidity fee) (during Construction Lender) 1.00%
Credit Enhancement (excludes liquidity fee) (after Construction Lender) 0.900%
~ond Term 33 Interest Rate Cap Purchase 0 Annual Bond Admin:
nterest Only Period 3 Negative Arbitrage 0.000% 0 Issuer 0.125% (-t41
Maortization Period 30 Perm Loan Fee 1.22% 423 Rating Agency 0.000% 0
~,mort. Sinking Fund Sch. rate (Variable undenvriting) 6.314% a
App. & Consult. 0.09% 30 Trustee 0.014% (5.0)
SIC Investment Rate 1.250%
Loan Constant (Variable underwriting) 0.0747 Financial Advisor 1.0% 348
Loan Constant (swap rate) 0.0666
Other 0.269% .94 Total Bond Admit
Debt Service Coverage Ratio (Minimum) 1.20 Total Issuance Costs 1,461
Loan Amount - With CaLPERS Standby 1.20 . 34,819_
Initial Earnout
Loan Amount - Variable Underwriting I . 32,819 ' 34,862~
Var ab e Underwr~tin9 Rate Summary
Bond Rate 5.00%
THIS PRO FORMA IS BASED UPON PRELIMINARY INFORMATION THAT MUST BE CONFIRMED Remarketing 0.125%
WITH THE CITY OF DUBLIN, Liquidity 0.15°/o
issuer Fee 0.125%
Tax Exempt Bonds 30,000 Trustee 0.014%
Taxable Bonds 4,819 Credit Enhancement 0.90%
Total 34,819 Sub-Total (underwriti~ 6.314% a
Int. Rate Cap Contrib 0.200%
Total Rate 6.51%
Initial Funding Amount 34,819
Memo: Amount of escrowed bonds held until perm loan 0
..... , b/] ~/ZUUJ '1'1 :~b PdVI LJUDIIn ApartmenTs I-'ro Po[ma Variable June 1/, Zuu3 bamily(g;ity).xls Data
"· KLEIN FINANCIAL CORPORATION IALL SCHEDULES ARE SUBJECT TO BOND COUN, SEL APPROVAL
Fairway Ranch Apartments, Dublin CA Phase I
Project Data - Total Project
(000% Omitted from $ Amounts)
I Construction Financing Financing Costs: % Thou
Interest Rate 1.70% Origination fee 1.0% 353
Stated Amount of Credit Enhancement 12.00% $ 35,251
Credit Enhancement (first 36 months) 1.00% Credit Fees During Constr & LU 881
Credit Enhancement (37 to 60 months) 1.00%
Term of Construction Financing (years) 33 Other - Title & CIosin 0.1% 40
Number of Years of Term used 3 Total Closing Costs 1,274
Total Loan Amount 34,819
City A~sistance
Interest Rate 3.000%
Loan Term 55 Financing Costs: % Thou $$
Years of no payments N/A Other 0
Assistance Amount 2,250 Total Closing Costs 0
IF MORE THAN 50% OF THE LOW,INCOME UNIT DEVELOPER FEE IS DEFERRED THEN THAT POTION OF THE DEVELOPER FEE THAT IS BEING DEFERRED THAT ES ABQVE 50%
MAY HAVE TO BE PAID AND THEN ADVANCED AS CAPITAL PURSUANT TO POTENTIAL TCAC REQUIREMENTS,
BOND COUNSEL NEEDS TO APPROVE PROJECT COST CLASSIFICATIONS, THE TAX CREDIT CPA NEEDS TO APPROVE THE TAX CREDIT COST CLASSIFICATIONS,
THE CREDIT ENHANCER NEEDS TO APPROVE THE CASH FLOW AND UNDERWRITING ASSUMPTIONS,
THE TAX CREDIT ESTIMATES CONTAINED IN THESE PROJECTIONS ARE ROUGH ESTIMATES
TO BE USED ON AN INTERIM BASIS FOR INTERNAL USE ONLY UNTIL THE TAX CREDIT
CPA HAS DONE THEIR ANALYSIS AND PROJECTIONS. THESE ROUGH ESTIMATES ARE
NOT TO BE RELIED ON,
DISCLAIMER: THE PROFORMA OPERATING STATEMENTS, DEVELOPMENT BUDGETS, AND/OR ESTIMATES OR RETURNS ON INVESTMENT
CONTAINED HEREIN ARE BASED UPON PROJECTIONS AND ASSUMPTIONS WHICH ARE SUBJECT TO CHANGES iN MARKET AND/OR ECONOMIC CONDITIONS OR
OPERATIONAL REQUIREMENTS SPECIFIC TO THE PROJECT AND/OR THE LENDERS OR OWNERS. NO REPRESENTATIONS OR WARRANTY IS MADE THAT THE PROJECTIONS
OR ESTIMATES CONTAINED HEREIN WILL REFLECT ACTUAL RESULTS. ACTUAL RESULTS MAY BE SIGNIFICANTLY BETTER OR WORSE THAN THESE PROJECTIONS.
INVESTMENT IN REAL ESTATE OF THIS NATURE IS SPECULATIVE AND CARRIES A SUBSTANTIAL DEGREE OF RISK AND INVESTORS SHOULD OBTAIN INDEPENDENT
RESEARCH AND CONSULTATION AS TO THE SUBJECT MATTER PRESENTED HEREIN AND NOT UTILIZE THE INFORMATION CONTAINED IN THESE PROFORMAS WITHOUT
CONSIDERIN(~ ALTERNATIVE OUTCOMES CREATING SIGNIFICANTLY BETTER RESULTS OR A MAJOR AND/OR COMPLETE LOSS. THIS DISCLAIMER IS APPLICABLE TO
SUMMARY AND ALL DETAILED PROJECTIONS AS WELL AS ALL CORRESPONDENCE AND DISCUSSIONS ON THIS INVESTMENT.
This schedule is pad of an integrated document and no one page should be read without reading the other pages and the disclaimer contained on this Project Data schedule.
2
' , 6/16/2003 11:36 AM Dublin Apartments Pro Forma variable June 17, 2003 Family(City).xls Dp CF
KLEIN FINANCIAL CORPORATION
Fairway Ranch Apartments, Dublin CA Phase I
Cash Flow from Operations LALL SCHEDULES ARE SUBJECT TO BOND COUNSEL APPROVAL J
(000's Omitted from $ Amounts)
63.00 90
61 Market Market 90 120% Med. 120% Med. VLI VLI VLI LI LI Ll
2004 2005 2006 Market RENTS RENTS Moderate RENTS RENTS Affordable RENT RENT Affordable RENT RENT
304 TotalStabilized Stabilized20.07% 2005 2004 29.61% 2005 2004 20.72% 2005 2004 29.61% 2005 2004
CASH FLOW FROM OPERATIONS Total Unitssi/Unit($000's) 3~otal Total of Units $ per Unit $ per Unitof Units $ per Unit $.l~er unit .Df Units $ per Unit $ per Unitof Units $ per IJpit $ per Unit
Consolidated:
Rental lncome- PLAN A: I Bed 68 575 662 601 701 0 1,2351,200 3 1,173 1,140 31 $ 739$ 718 34 893 868
Rental Income - PLAN B: t Bed 36 650 545 561 577 0 1,3671,328 36 1,298 1,262 0 $ 739$ 710 0 893 865
Rentallncome* PLAN B2: t Bed 24 710 389 400 412 24 1,3891,350 0 1,320 1,283 0 $ 739$ 715 0 893 868
RentaIIncome- PLAN C: 2 Bed 40 825 430 443 455 0 1,492t,,150 0 1,4t7 t,378 32 $ 885$ 890 8 1,070 1,040
Rental Income - PLAN C2:2 Bed 44 867 803 826 850 1 1,6581,61 t 42 1,575 1,530 0 $ 885$ 860 I 1,070 1,040
Rentallncome- PLAN D: 2 Bed 36 987 754 776 798 36 1,7961,745 0 1,706 1,658 0 $ 885$ 860 0 1,070 1,040
Rental Income- PLAN E: 3 Bed 56 1,035 866 691 917 0 1,9091,855 9 1,813 1,762 0 1,019 990 47 1,233 1,198
Rental Income- Other (Real Estate Related 304 10! 104 107 29 $ 28
Gross Scheduled Income 4.550 4,952 4,8't0' 275 1,073
Vacancy / Credit Loss 500% (228) (~34) (241.) 5.00% 5.00%
Effective Gross Income (ECl) 4,323 4,448 4,577
Operating Expenses' 304 (973) (1,001) (1,030) 3,200 unit
Capital Replacement Reserve (61) (61) (64)
Taxes and Assessments , . . 347 . (~5~)., i76/)
Total Operating Expenses {1,380) (1,4t5) (t,451)
Net Operating Income (NOI) 2.943 3,033 3,126
Debt Service (Series A) (2,g02i (2,602) (2:602)
Cash Flow After Debt Service 341 431 524
Interest Rate Cap Contribution 0.200% (70) (70) (70)
Tax Credit Investor Admin Fee (20} (20) 120}
Net Cash Flow 251 342 434
Underwritten DSCR 1,20
DISCLAIMER'. THE PROFORMA OPERATING STATEMENTS, DEVELOPMENT BUDGETS. AND/OR ESTIMATES OR RETURNS ON INVESTMENT
CONTAINED HEREIN ARE BASED UPON PROJECTIONS AND ASSUMPTIONS WHICH ARE SUBJECT TO CHANGES IN MARKET AND/OR ECONOMIC CONDITIONS OR
OPERATIONAL REQUIREMENTS SPECIFIC TO THE PROJECT AND/OR THE LENDERS OR OWNERS. NO REPRESENTATIONS OR WARRANTY IS MADE THAT THE PROJECTIONS
OR ESTIMATES CONTAINED HEREIN WILL REFLECT ACTUAL RESULTS. ACTUAL RESULTS MAY BE SIGNIFICANTLY BETrER OR WORSE THAN THESE PROJECTIONS.
INVESTMENT IN REAL ESTATE OF THIS NATURE IS SPECULATIVE AND CARRIES A SUBSTANTIAL DEGREE OF RISK AND INVESTORS SHOULD OBTAIN INDEPENDENT
RESEARCH AND CONSULTATION AS TO THE SUBJECT MATTER PRESENTED HEREIN AND NOT UTILIZE THE INFORMATION CONTAINED IN THESE PROFORMAS WITHOUT
CONSIDERING ALTERNATIVE OUTCOMES CREATING SIGNIFICANTLY BE'Fi'ER RESULTS OR A MAJOR AND/OR COMPLETE LOSS. THIS DISCLAIMER IS APPLICABLE TO
SUMMARY AND ALL DETAILED PROJECTIONS AS WELL AS ALL CORRESPONDENCE AND DISCUSSIONS ON THiS INVESTMENT.
This schedule is part of an integrated document and no one page should be read wilhout reading the olher pages and lhe disclaimer cdntained on the last page of this schedule. ';- ....
3
KLEIN FINANCIAL CORPORATION ALL SCHEDULES ARE SUBJE~b~is'~l~Pl~EE~r~Vi~b~eLJune 17, 2003 Family(City).xls Cost 6/1§12003 11:36 AM
Fairway Ranch Apartments, Dublin CA Phase I
Project Costs & Equity
(000's Omitted from $ Amounts) $ per sf Total
sf/Unlt or Unit ($000's)
Acquisition Costs:
Land & Demo 326,700 48,975 16,000 *
Title Insurance, Recording Fees, etc. 80
Subtotal - Acquisition Costs 16,080
Contingency - Acquisition Costs 0.00% 0
Total Acquisition Costs 326,700 49.22 16,080
Production Costs:
Parking Garage & Drives 476 $ 9,975 4,748
Appraisal, Market Study & Expense Analysis 75
Sitework 2,275
Professional Services Fees 80
Construction Costs 244,180 $ 100.33 24,499
Feasibility Analysis Consultation 95
Construction Management 3.20% 1,009
Construction Analysis / Physical Needs Assess. 80
Entitlements and Govern. Profess. Services 115
Tax Credit Consulting 85
Architecture & Engineering 304 $ 2,467 750
JV Partner / Tax Credit Counsel 25
TCAC Fees 75
Permits, Fees 304 $ 31,000 9,424
Construction Pedod Financial Services 95
Subtotal - Production Costs 43,429
Contingency - Production Costs 4.00% 1,261
Total Production Costs 44,690
Financing Costs:
Housing Bond Issuance Costs (Series A) 2.52% 878
Housing Bond Legal & Expenses Costs (Series A) 0.46% 160
permanent Loan Fees & Costs 1.22% 423
Series A Bond Adminstration (dudng Constr, LU, Seasoning) 82
Sedes A Bonds (Int Rate Cap impounds dudng Constr & LU) 0.88% 305
CalPers Trans. Fee & Construction Put Foes 602
Interest - City Assistance/Loan 174
Interest ~ CaIPERS 684
Construction Loan Fees & Costs 1.13% 393
Construction Lender Credit Enhancement Fees 1.00% 881
Series A Bond Interest 0 1.70% 1,776
Subordinate Ground LeaSe 808
Sedes A Bond Investment Earnings 1.25% (256)
Subtotal - Financing 6,§10
Contingency - Financing 4.00% 276
Total Financing 7,187
· - Land Value Before Restrictions
This schedule is part of an integrated document and no one page shoutd be read without reading the other pages and the disclaimer contained on the last page of this schedule.
4
KLEIN FINANCIAL CORPORATION [ALL SCHEDULES ARE SUBJE~¥b~is'~(~[~;~LJPI'[§EF~rA't~P~a~t June 17, 2003 Family(City).xls Cost 6/18/2003 11:36 AM
Fairway Ranch Apartments, Dublin CA Phase I
Project Costs & Equity
(000's Omitted from $ Amounts) $ per sf Total
si/Unit or Unit ($000's)
Indirect Costs:
Advisory Services and Other Prof Services 233
Insurance 255,095 0.60 153
Legal &Accounting 255,095 $ 2.21 565
Marketing Budget (including Oper Deficit) 75
R.E. Taxes 255,095 $ 0.59 150
Subtotal - Indirect Costs 1,176
Contingency * Indirect Costs 5.00% 59
Total Indirect Costs 1~,235
Subtotal - Project Costs 69,192
Deve!oper Fee
Very Low Income Unit Development Fee 3.61% 2,500
Total Project Costs 71~692
Lease-up Costs (Income) . (~1,614)
Net Project Costs 70,078
Sources of.Funds (durin,q Construct!on and Lease-up)
Series A Bond Financing (initial Funding Amount) 34,819
City Assistance 2,250
Accrued Interest - City Assistance/Loan 174
Accrued Interest - CalPERS 166
Accrued Subordinate Ground Lease 808
Deferred Developer Fee 1,300
CalPERS Mezz. Loan 2,000
Tax Credits - Admission Funding 2,706
Tax Credits - 75% Complete Funding 2,706
Tax Credits - Full Project Completion Funding 2,706
Additional Developer Equity 4,441
Subtotal Developer Equity 16,835
Equity -Via Land Value In Ground Lease 16,000
Total Developer Equity (Includes Tax Credit Equity) 32,835
Total Sources of Funds 70,078
Sources of Funds (at s~abilization, Final Bond Funding, and Final Tax Credit Fundin.q)
Series A Bond 34,819
Cash Flow Required To Fund Project Costs 1 ,t99
City Assistance 2,250
Accrued interest - City Assistance/Loan 174
Accrued Interest - CalPERS 168
Accrued Subordinate Ground Lease 808
Deferred Developer Fee 1,300
CalPERS Mezz. Loan 2,000
Tax Credits - Admission Funding 2,706
Tax Credits - 75% Complete Funding 2,706
Tax Credits - Full Project Completion Funding 2,706
Tax Credits - Final Funding 902
Tax Credit Investor Operating Reserve (197)
Developer Equity 2,537
Subtotal Developer Equity 15,468
Equity -Via Land Value In Ground Lease 16,000
This schedule is part of an integrated document and no one page should be read without reading the other pages and the disclaimer contained on the last page of this schedule.
5
KLEIN FINANCIAL CORPORATION ALL SCHEDULES ARE SUBJE~b~)'~O~t~.~l~l'§~:~r~r~pV~~/~eLJune 17, 2003 Family(City),xls Cost 6/18/2003 11:36 AM
Fairway Ranch Apartments, Dublin CA Phase I
Project Costs & Equity
(000's Omitled from $ Amounts) $ per sf Total
sflUnit or Unit ($000's)
Total Developer Equity (Includes Tax Credit Equity) 31.468
Total Sources of Funds 70,078
This schedule is part of an integrated document and no one page should be read without reading the other pages and the disclaimer contained on the last page of this schedule.
6
' ' KLEIN FINANCIAL CORPORATION IALL SCHEDULES ARE SUBJE~I~is'~]~O"~[~'I:~PNi'§EF~rAq'~P"J~I~j~eLJune 17, 2003 Family(City).xls Cost 6/18/2003 11:36 AM
Fairway Ranch Apartments, Dublin CA Phase I
Project Costs & Equity
(000% Omitted from $ Amounts) $ per sf Total
sf/Unit or Unit ($000's)
Tax Credit Calculation:
Total Eligible E~asis
Threshold Basis Limitation
adjustment: Permits & Fees
High Cost Area Factor 30.00%
Total Adjusted Eligible Basis 62,825
Applicable Fraction 481680//0 30,706
Applicable Percentage 0.0338 1,038
lO Yearso, Tax Cred.s l0
Amount of Credits Sold
Sales Price per $1.00 of Credits $ 0,870
Applicable Fraction includes 0 additional affordable units as a cushion
Tax Credit Fundinq Sqhedule:
Construction Loan Closing (Admission) ~
75% Completion
100% Complete .
Stabilization (110% Debt Service Coverage, 8609%)
This schedule is part of an integrated document and no one page should be read without reading the other pages and the disclaimer contair~ed on the last page of this schedele.
7
6/18/2003 11:36 AM Dublin Apartments Pro Forma variable June 17, 2003 Family(City).xis 15 yr
KLEIN FINANCIAL CORPORATION
Fairway Ranch Apartments, Dublin CA Phase
15 Year Cash Flow I ALL SCHEDULES ARE SUBJECT TO BOND COUNSEL APPROVAL I
(000's Omitted from $ Amounts)
Rent Bumps 2.50% *
Operating Expense CPI 3,50% *
Property Tax CPI 2.00%
Stabilized Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Beginning Jan~7 Jan-05 Jan-09 Jan-10 Jan-11 Jan-t2 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21
Rental Income -Apartments 4,829 4,949 5,073 5,200 5,330 5,463 5,600 5,740 5,883 6,030 6.181 6.336 6,494 6,656 6,823
Rental Income - Other (Real Estate Related) 110 112 115 118 121 124 127 130 134 137 140 144 148 151 155
Gross Scheduled Income 4,938 5,062 5,188 5,318 5,451 5,587 5,727 8,870 6,017 6,167 6,322 6,480 6,642 6,808 6,978
Vacancy/Credit Loss 5.00% (247) 1253) (259) (266) (273) (279) (286) (2941 (301) . (308) (316) (324) (~32) .~.~)_. (349)
Effective Gross Income (EGI) 4~692 4~809 4~929 5~052 5,179 5~308 5,441 5 577 5 716 5,850 6~006 6~156 6~310 6 467 6~629
Operating Expenses* (t.06~) (l',ib3i ' (t,1~2~ (1,182) (1,223) (1,26'6) (1,3i0) ' (1,356) 1,40~,) (1,'453)' (1,504) (1 556) ~1,611) (1,667) (1,726)
Capital Replacement Reserve $200 (61} (63) (65) (67) (70) (72) (75) (77) (80) (83) (86) ¢9) (92) (95) (98)
Taxes and Assessments .(36~) (37.5) (383) (390) {398) (406) (.414) (422 431.t .(4¢0) (448) (457) __.{466) (476) (485)
Total Operating Expenses (1,495) (1,541) (!,5_90) (1,640) (1,691) (1,744) (1,790) (I,856) (1,915} . (1,975) (2,038) (2,193) (2,169) (2 23.__8) (2,309)
Net Operating Income (NOI) 3,197 3,267 3,339 3,413 3,487 3,564 3,641 3,721 3,801 3,884 3,968 4,053 4,140 4,229 4,320
Debt Service (Series At1 (2,602) (2,602) (2,602) (2,U02) (2,602) (2,602) (2,602) (2,602) (2,602) (2,602) (2.602) (2,6('12) (2,602) (2,602) (2,602)
Interest Rate Cap Contribution 0.20% (70) (70) (70) (70) (70) (70) (70) (70) t70) (70) (70) (70) (70) (70) (70)
Tax Credit Investor Administrative Fee (22) (23) (23) (24) (25) (26) (27) (28) (29) (30) (31) (32) (33) (34) (35)
Partnership/Acct./Tax Retums/Admin. (2~') (28) (29) (38) (30) (31) (32) (33) (34) (35) (36) (37) (39) (40) (4 I)
Subordinate Management Fee ~_6_0 )_ 60 (60) (60) (60) (60) (106) (109) (112) (114'1. (117) (120), (123) (1~6) (129), (133)
4~6 556 628 701 729 802 877 953 1,030 1,109 1,190 t,271 1,355 1,440
Net Cash Flow
City Assistance Payment 0 (853) (876) (898) 0 0 0 0 0 0 0 0 0 0 - 0
CaIPERS Interest PaymentJReturn of Principal (313) (364) (417) (471) (526) (547) (602) (383) 0 0 0 0 0 0 0
Owller Contribution 0 853 876 898 0 0 0 0 0 O O 0 0 0 0
Owner Contribution Repyament 0 0 0 0 0 0 0 (275) (715) (773) (832) (33) 0 0 0
Deferred Developer Fee Payment (104) (121) (139) (157) (1'75) (182) (201) (219) (1) 0 0 0 0 0 0
Subordinale Ground Lease Payment 0 0 0 0 0 0 0 0 0 0 0 (880) (954) (1,018) (1,080)
Net Cash Flow 0 (0) 0 0 0 0 0 0 237 258 277 297 318 339 360
DSCR 1.229 1.256 1.284 1.312 t.341 1.370 1.400 1.430 1.461 1.493 1.525 1.558 1.591 1.626 1.660
CalPERS Mezz. Loan
Beginning Balance 2,168 2,115 2,005 1,828 1,577 1,240 842 342
Interest Accrual 12.00% 260 254 241 219 189 149 101 41
Interest Payments/Return of Principal (313) (364) (417) (471) {5261 (547) (602) (3~3)
Ending Balance '2.1'15 2,005 ' 1,828 1,577 1,240 842 ~42
City Assistance
Beginning Balance 2.424 2,492 1,706 876
Interest Accrual 3.000% 68 68 45 23
Payments - Principal ,~:' "'~ 0.0% (750) (750) . (750) -
Payments-Interest (103) . (126) (148)
Ending Balance 2,492 1,706 876
Deferred De¥eloper Fee
Beginning Balance 1,300 1,196 1,074 935 778 603 421 220 1
Interest Accrual
Payment (104) (121) (139) (157) (175) (182) (.201) (219) (.~1~
Ending Balance 1,196' 1,074 935 778 603 ' 421 '220
I - Debt service for 15 yr. Cash flow is calculated based on an assumed 5.0% variable rate plus the stack including issuer and trustee f{
This schedule is part of an integrated document and no one page should be read without reading the other pages and the disclaimer contained on this schedule.
8
,6/18t2003 11:36 AM Dublin Apadmenis pro Forma vedable June 17, 2003 Family(City).xls Rentroll
KLEIN FINANCIAL CORPORATIOI~ ~ALL SCHEDULES ARE SUBJECT TO BOND COUNSEL APPROVAL ~
Faiiw'ay Ranch Apartraents, Dublin CA Phase
Residential Apartment Rent RD 1
200! 200,~ 2005 2004 200~ 200~ 200! 2004
50~/ 50°/ 60°/, 60% 120°/, 120°/
MEDIAl, MEDIAl, MEDlAr, MEDIAN MEDIA~ MEDIAl'
VERY 120% VERY LOV~VERY LO~.LOW LOW LOW LOV~ NON NON-
LOW LOW MEDIAN MARKET iNCOME; INCOM; iNCOME iNCOME iNCOME iNCOME RESTRICTED RESTRICTED
INCOME iNCOME INCOME RATE # OF TOTAL RENT! REN~' RENT RENT RENT RENT RENT RENT
UNIT TYPE pLAN BEDS SQ. FT. UNITS UNITS UNITS UNITS UNITS SQ. FT. PER UNIT PER UNI~IPER UNITPER UNITPER UNI'i' PER UNiT PER UNIT PER UNIT
1/1 A 1 575 31 34 3 0 68 39,100 22.37% $ 739$ 718 $ 893 $ 868 1,173 $ 1,140 $ 1,235 $ 1,200
1/t B 1 650 0 0 36 0 36 23,400 11.84% $ 739~ $ 718 $ 893 $ 868 1,298 $ 1,262 $ 1,367 $ 1,328
1/I 82 1 710 0 0 0 24 24 17,040 7.89% $ 739$ 718 $ 893 $ 868 1,320 $ 1,283 $ 1,389 $ 1,350
2/1 C 2 825 32 8 0 0 40 33,600 13.16% $ 865: $ 860$ 1,070 $ 1,040 t,417 $ 1,378 $ 1,492 $ 1,450
2/2 C2 2 867 0 1 42 I 44 38,146 14.47% $ 685$ 860$ 1,070 $ 1,040 1,575 $ 1,530 $ 1,658 $ 1,611
2/2 D 2 987 0 0 0 36 36 35,532 11.84% $ 885$ 660 $ 1,070~ 1,040 1,706 $ 1,658 $ 1,790 $ 1,745
3/2 E 3 1,035 0 47 9 0 56 57,960 18.42% $ 1,019 990, $ 1,233 1,198 1,613 $ 1,762 1,909 $_._. 1,=85.~5
TOTALS 63 90 90 61 304 244,180 100.00%
Average S,F. per unit 863 $ 1,200
Comparison of Very L_ow~locome Restri_cted Un I Renl Gu de nee
2004 Non
2004 2004 projected Restricted Maximun'
assumed TCAC Issuer Bond Net rents VLI
Family Gross Restricted Gross utility Restrictive pre net
PLAN BEDS Size rents rents rents allow Rents construct rents
A 1 1.5 751 801 33.00 716 1,200 718
B 1 1.5 751 601 33.00 718 1,328 716
82 1 1.5 751 601 33.00 718 1,350 718
C 2 3.0 901 901 41.00 860 1.450 860
C2 2 3.0 901 901 41.00 860 1,611 860
D 2 3.0 901 901 41.00 860 1,745 860
E 3 4.5 1,041 1,001 51.00 990 1,855 990
estimate ef Very Low income Tax Exempt MulO-fam0y Bond Rent Restrictions
2004
30,00%
assuraed 50.00% Bond
Fatally IDcorae Gross
PLAN BEDS Size Level rents
A 1 2 32.050 801
B 1 2 32.050 801
82 I 2 32,650 661
C 2 3 36,050 901
C2 2 3 36.050 901
D 2 3 36,050 901
E 3 4 40.050 1.001
This schedule is part of an integrated document and no one page should be read without reading the other pages and the disclaimer contained on the last page of this schedule.
10
' 6/19/2003 11:36 AM Dublin Apartments Pro Forma variable Jbne 17, 2003 Family(City).xls Rentroll
KLEIN FINANCIAL CORPORATIO~ IALL SCHEDULES ARE SUBJECT TO BOND COUNSEL APPROVAL I
Fairway Ranch Apartments, Dublin CA Phase
Residential Apartment Rent Re 1
-~omearison of Low income Rest~Lctsd Unit Rent Guideli~nea
2004 Non
2004 2004 projected Restricted Maximum
assumed TCAC issuer Bond Net rents LI
Family Gross Restricted Gross utility Restrictive pre net
PLAN BEDS Size rents rents rents a0ow Rentsconstrucl rents
A 1 1.5 901 962 33.00 860 1,200 666
B 1 1.5 901 962 33.00 868 1,328 866
62 1 1.5 901 962 33.00 868 1,350 806
C 2 3.0 1,081 1,082 41.00 t,040 t,4~0 1,040
C2 2 3.0 1,081 1,062 41.00 1,040 1,611 1,040
D 2 3.0 1,081 1,082 41.00 1,040 1,745 1,040
E 3 4.5 1,249 1,202 51.00 1,198 1,855 1,198
~stimats of Low Income Tax Exempt Multi-family Bond Re_ut Restrictions
2004
30.00%
assumed 60.00% Bond
Family Income Gross
PLAN BEDS Size Level rents
A 1 2 38,460 962
B I 2 38,460 962
62 1 2 36,460 962
C 2 3 43,260 1,082
C2 2 3 43,260 1,082
D 2 3 43,260 1,082
E 3 4 49,060 1,202
Comparison of 120% Moderate Inc0mP R~strictsd Unit Rent Guidelines
2004 2004
assumed Maximum City rent 35% 95% of 2003 use Net
Fam~y Income of Income Non Rest. lowest utility Restrictive
PLAN BEDS Size Level routs Rents Rents allow Rents
A I 2.0 76,920 2,244 1,140 1,140 0.00 1,140 Assumes no utility allow, req,
B 1 2.0 76,920 2,244 1,262 1,262 0.00 1,262 Assumes no utility allow, req.
02 1 2.0 76,920 2,244 1,283 1,283 0.00 1,283 Assumes no utility allow, req.
C 2 3.0 86,520 2,524 1,378 1,378 0.00 1,378 Assumes no utility allow, raq.
C2 2 3.0 86,520 2,524 1,530 1,530 0.00 1,530 Assumes no utility allow, req.
D 2 3.0 86,520 2,524 1,656 1,658 0.00 1,658 Assumes no utility allow, req.
E 3 4.0 96,120 2,804 1,762 1,762 0.00 1,762 Assumes no utility allow, req,
This schedule is part of an integrated documedt and no erie page should be read without reading the other pages and the disclaimer contained on the last page of this schedule.
6/18/2003 11:38 AM Dublin Apartments Pro Forma variable June 17, 2003 Famiiy(City).xls Other Income
KLEIN FINANCIAL CORPORATION
Fairway Ranch Apartments, Dublin CA Phase I IALL SCHEDULES ARE SUBJECT TO BOND COUNSEL APPROVAL
Estimate of Other Income (Includes Cable & Communication Revenue)
Annual
Account Name Total
LAUNDRY/VENDING 304 $ 6.00 $ 21,888
OTHER MISCELLANEOUS INCOME $ 18,000
PARKING INCOME [garages) 85 $ 60.00 $ 61,200
TOTAL OTHER RENTAL INCOME $101,088
DISCLAIMER: THE PROFORMA OPERATING STATEMENTS, DEVELOPMENT BUDGETS, AND/OR ESTIMATES OR RETURNS ON INVESTMENT
CONTAINED HEREIN ARE BASED UPON PROJECTIONS AND ASSUMPTIONS WHICH ARE SUBJECT TO CHANGES IN MARKET AND/OR ECONOMIC CONDITIONS OR
OPERATIONAL REQUIREMENTS SPECIFIC TO THE PROJECT AND/OR THE LENDERS OR OWNERS. NO REPRESENTATIONS OR WARRANTY IS MADE THAT THE PROJECTIONS
OR ESTIMATES CONTAINED HEREIN WILL REFLECT ACTUAL RESULTS. ACTUAL RESULTS MAY BE SIGNIFICANTLY BETTER OR WORSE THAN THESE PROJECTIONS.
INVESTMENT IN REAL ESTATE OF THIS NATURE IS SPECULATIVE AND CARRIES A SUBSTANTIAL DEGREE OF RISK AND INVESTORS SHOULD OBTAIN INDEPENDENT
RESEARCH AND CONSULTATION AS TO THE SUBJECT MATTER PRESENTED HEREIN AND NOT UTILIZE THE INFORMATION CONTAINED IN THESE PROFORMAS WITHOUT
CONSIDERING ALTERNATIVE OUTCOMES CREATING SIGNIFICANTLY BETTER RESULTS OR A MAJOR AND/OR COMPLETE LOSS. THIS DISCLAIMER IS APPLICABLE TO
SUMMARY AND ALL DETAILED PROJECTIONS AS WELL AS ALL CORRESPONDENCE AND DISCUSSIONS ON THIS INVESTMENT.
This schedule is part of an intergrated document and no one page shoutd be read without reading the other pages and the disclaimer contained on the last page of this schedule.
1
6/18/2003 11:44 AM Dublin Apartments Pro Forma vadable Juno 17, 2003 Senior(City).xls Data
KLEIN FINANCIAL CORPORATION IALL SCHEDULES ARE SUBJECT TO BOND COUNSEL APPROVAL
Fairway Ranch Apartments, Dublin CA Phase II - Senior
Project Data - Total Project
(000's Omitted from $ Amounts)
PROJECT DATA Acres Sq Ft IBuildin~] Area
Gross Site Area (estimated) 7.50 326,700
I
I
Public Dedications ~ Rentable 227,640
Total Net Site Area 7.50 326,700 ~ Load 30,000 ~ 11.64%
~ Gross SF 257,640 ~
Start of Projection Jan-04 Jan-04 lNumber of Apadments 322 ~
Residential
I
I
=reconstruction / Bond Closing Period 6 months
3onstruction Period t5 months
.ease-up Period 9 months
Project Seasoning Period 6 months
Rent Concession Period 0 months
Total Period 36
FINANCING ASSUMPTIONS
HousinR Bond (Series A) Bond Costs: % Thou $$ % Thou $$
NOI $ 2,728 Issuance 1.20% 389 Cap Repl. RETAIL 0.75% 0
Stated Amount of Credit Enhancement 12.00% $ 32,828
Interest Rate (construction cap) I Variable I 1,700% Legal & Expenses 0.493% 160 CAP REPL APTS $200 (64)
interest Rate (on escrowed bonds) 1.700%
Credit Enhancement (excludes liquidity fee) (during Construction Lender) 1.00%
Credit Enhancement (excludes liquidity fee) (after Construction Lender) 0.900%
Interest Rate (Until Permanent) 1.70% Reserves 0.00% 0
Band Term 33 Interest Rate Cap Purchase 0 Annual Bond Admin:
interest Only Period 3 Negative Arbitrage 0.000% 0 Issuer 0.125% (41
Amortization Period 30 Perm Loan Fee 1,23% 399 Rating Agency 0.000% 0
Amort. Sinking Fund Sch. rate (Variable underwriting) 6.315% a
App. & Consult. 0.09% 30 Trustee 0.015% (5,0)
GIC investment Rate 1.250%
Loan Constant (Variable underwriting) 0.0747 Financial Advisor 1.0% 324
Loan Constant (swap rate) 0.0666
Other 0,271% 88 Total Bond Admir 0.140%
Debt Service Coverage Ratio (Minimum) 1.20 Total Issuance Costs 1,391
Loan Amount - With Earn-Out 1~20 32,425
Initial Earnout
Loan Amount - Variable Underwriting I 30,425 32,467
........ Variable Under~vritin_,.q_~ate Summary
~ond Rate 5.00%
THIS PRO FORMA IS BASED UPON PRELIMINARY INFORMATION THAT MUST BE CONFIRMED ~emarketing 0.125%
WITH THE CITY OF DUBLIN. Liquidity 0.15%
Issuer Fee 0.125%
-rustee 0.015%
~'ax Exempt Bonds 30,000 I ;redit Enhancement 0.90%
Taxable Bonds 2,425I Sub-Total (underwritil 6.315% a
Total 32,425
Iht. Rate Cap Contrib 0.200%
Total Rate 6.52%
Initial Funding Amount ;~2,425
Memo: Amount of escrowed bonds held until perm loan 0 ~'~ .~
6/18/2003 11:44 AM Dublin Apartments Pro Forma variable June 17, 2003 Senior(City).xls Data
KLEIN FINANCIAL CORPORATION IALL SCHEDULES ARE SUBJECT TO BOND COUNSEL APPROVAL
Fairway Ranch Apartments, Dublin CA Phase 11 - Senior
Project Data - Total Project
(000's Omitted from $ Amounts)
IConstructionFinancin,q Financing Costs: % Thou $$
Interest Rate ' 1.70% Origination fee 1.0% 328
Stated Amount of Credit Enhancement 12.00% $ 32,828
Credit Enhancement (first 36 months) 1.00% Credit Fees During Constr & LU 821
Credit Enhancement (37 to 60 months) 1.00%
Term of Construction Financing (years) 33 Other - Title & Closin 0.1% 40
Number of Years of Term used 3 Total Closing Costs 1,189
Total Loan Amount 32,425
City Assistance
Inierest Rate 3.000%
Loan Term NA Financin~l Costs: % Thou $$
Years of no payments N/A Other 0
Assistance Amount 2,250 Total Closing Costs 0
Deferred Impact Fees
IF MORE THAN 50% OF THE LOW,INCOME UNIT DEVELOPER FEE IS DEFERRED THEN THAT POTION OF THE DEVELOPER FEE THAT tS BEING DEFERRED THAT IS ABOVE 50%
MAY HAVE TO BE PAID AND THEN ADVANCED AS CAPITAL PURSUANT TO POTENTIAL TCAC REQUIREMENTS.
BOND COUNSEL NEEDS TO APPROVE PROJECT COST CLASSIFICATIONS. THE TAX CREDIT CPA NEEDS TO APPROVE THE TAX CREDIT COST CLASSIFICATIONS.
THE CREDIT ENHANCER NEEDS TO APPROVE THE CASH FLOW AND UNDERWRITING ASSUMPTIONS.
THE TAX CREDIT ESTIMATES CONTAINED IN THESE PROJECTIONS ARE ROUGH ESTIMATES
TO BE USED ON AN INTERIM BASIS FOR INTERNAL USE ONLY UNTIL THE TAX CREDIT
CPA HAS DONE THEIR ANALYSIS AND PROJECTIONS. THESE ROUGH ESTIMATES ARE
NOT TO BE RELIED ON.
DISCLAIMER: THE PROFORMA OPERATING STATEMENTS, DEVELOPMENT BUDGETS, AND/OR ESTIMATES OR RETURNS ON INVESTMENT
CONTAINED HEREIN ARE BASED UPON PROJECTIONS AND ASSUMPTIONS WHICH ARE SUBJECT TO CHANGES iN MARKET AND/OR ECONOMIC CONDITIONS OR
OPERATIONAL REQUIREMENTS SPECIFIC TO THE PROJECT AND/OR THE LENDERS OR OWNERS. NO REPRESENTATIONS OR WARRANTY IS MADE THAT THE PROJECTIONS
OR ESTIMATES CONTAINED HEREIN WILL REFLECT ACTUAL RESULTS. ACTUAL RESULTS MAY BE SIGNIFICANTLY BETTER OR WORSE THAN THESE PROJECTIONS.
INVESTMENT iN REAL ESTATE OF THIS NATURE IS SPECULATIVE AND CARRIES A SUBSTANTIAL DEGREE OF RISK AND INVESTORS SHOULD OBTAIN INDEPENDENT
RESEARCH AND CONSULTATION AS TO THE SUBJECT MATTER PRESENTED HEREIN AND NOT UTILIZE THE INFORMATION CONTAINED tN THESE PROFORMAS WITHOUT
CONSIDERING ALTERNATIVE OUTCOMES CREATING SIGNIFICANTLY BETTER RESULTS OR A MAJOR AND/OR COMPLETE LOSS. THIS DISCLAIMER tS APPLICABLE TO
SUMMARY AND ALL DETAiLED.PROJECTiONS AS WELL AS ALL CORRESPONDENCE AND DISCUSSIONS ON THIS INVESTMENT.
This schedule is part of an integrated document and no one page should be read without reading the other pages and the disclaimer contained on this Project Data schedule. "' 2
0118/2003 tt:44 AM Dublin Apartments Pro Forma variable June 1 ?, 2003 Senior(City).xla Op CF
KLEIN FINANCIAL CORPORATION
Fair'way Ranch Apartments, Dublin CA Phase ii - Senior
Cash Flow from Operations IALL SCHEDULES ARE SUBJECT TO BOND COUNSEL APPROVAL
(000's Omitted from $ Amounts)
65.00 97
~ 29 Market Market 131 120% Med. 120% Mod, VLI VLI VLI LI LI LI
2004 2005 2006 Market RENTS RENTS ModerateRENTS RENTS Affordable RENT RENT Affordable RENT RENT
322 Total StabilizedStabilized9.0t% 2005 2004 40.68% 2005 2004 20.19% 20[}5 2084 30,12% 2005 2004
CASH FLOW FROM OPERATIONS Total Unitssf/Unlt($000's) Total Total of Units $ per Unit $ per Unitof Units $ per Unit $ per Unitof Units $ per Unit $ per Unit of Units $ per Unit $ per Unit
Consolidated:
Rentallncome-PLAN F: 1 B=d 102 575 945 975 1,005 0 1,2371,200 0 1.175 t,140 65 $ 740$ 718 37 895 008
Rentalincome- PLAN F2:1 Bed 80 673 1.173 1.209 1,246 25 1,3041,265 55 1,239 1,202 0 $ 740$ 718 O 895 858
Rental Income - PLAN G: 2 Bed 60 787 749 772 796 0 1,4431,400 0 t,371 1,330 0 $ 887$ 860 60 1.072 1,040
Rental Income - pLAN 02:2 Bed 80 846 1,394 1,438 t,482 4 t,5721,525 76 1,494 1,449 0 $ 887$ 860 0 1,072 1,040
Rental Income- Other (Real Estate Related 322 101 104 108 27 $ 26
Gross Scheduled Income 4,363 4,498 4,637 577 397
Vacancy / Credit Loss 5.00% (218) (225) (£32) 5.00% 5.00%
Effective Gross Income (EGI) 4,144 4,273 4,405
Operating Expenses 322 (1,030) (1,062) (1,0,~5) 3,200 unit
Capi[al Replacement Reserve (64) (64) (64)
Taxes and Assessments (321) ~328} (334)
Total Operating Expenses (t,416) (1,454) (1,494)
Net Operating Income (NOI) 2,728 2,818 2,911
Debt Service (Series A) (2,423) .(2,42;3)
Cash Flow After Debt Service 305 395 488
Interest Rate Cap Contribution 0,200% (65) (05)
Tax Credit Investor Admin Fee (20) (20) {20)
Net CashFIow ' ' 220 31~1 ' 404
Underwritten DSCR t.20
DISCLAIMER: THE PROFORMA OPERATING STATEMENTS. DEVELOPMENT BUDGETS, AND/OR ESTIMATES OR RETURNS ON iNVESTMENT
CONTAINED HEREIN ARE BASED UPON PROJECTIONS AND ASSUMPTIONS WHICH ARE SUBJECT TO CHANGES IN MARKET AND/OR ECONOMIC CONDITIONS OR
OPERATIONAL REQUIREMENTS SPECIFIC TO THE PROJECT AND/OR THE LENDERS OR OWNERS. NO REPRESENTATIONS OR WARRANTY IS MADE THAT THE PROJECTIONS
OR ESTIMATES CONTAINED HEREIN WiLL REFLECT ACTUAL RESULTS. ACTUAL RESULTS MAY BE SIGNIFICANTLY BETTER OR WORSE THAN THESE PROJECTIONS.
iNVESTMENT IN REAL ESTATE OF THIS NATURE IS SPECULATIVE AND CARRIES A SUBSTANTIAL DEGREE OF RISK AND iNVESTORS SHOULD OBTAIN INDEPENDENT
RESEARCH AND CONSULTATION AS TO THE SUBJECT MATTER PRESENTED HEREIN AND NOT UTILIZE THE INFORMATION CONTAINED IN THESE PROFORMAS WITHOUT
CONSIDERING ALTERNATIVE OUTCOMES CREATING SIGNiFiCANTLY BETTER RESULTS OR A MAJOR AND/OR COMPLETE LOSS, THIS DISCLAIMER IS APPLICABLE TO
SUMMARY AND ALL DETAILED PROJECTIONS AS WELL AS ALL CORRESPONDENCE AND DISCUSSIONS ON THIS INVESTMENT.
This schedule is part of an integrated decoment and no one page should be read without reading the other pages and the disclaimer contained on the last page of this schedule.
3
KLEIN FINANCIAL CORPORATION [ALL SCHEDULES ARE SUBJECT Tol~)'~°~0~§~t~ PAr~l~JD~y-ariable June 17, 2003 Senior(City).xls Cost 6/18/2003 11:44 AM
Fairway Ranch Apartments, Dublin CA Phase II - Senior
Project Costs & Equity
(000's Omitted from $ Amounts', $ per sf Total
sf/Unit or Unit ($000's)
,Acquisition Costs:
Land & Demo 326,700 48,975 16,000 *
Title Insurance, Recording Fees, etc. 80
Subtotal - Acquisition Costs 16,080
Contingency - Acquisition Costs 0.00% 0
Total Acquisition Costs 326,700 49.22 16,080
Prod.u,¢tion Co,ts:
Parking Garage & Drives 129 $ 14,620 1,886
Appraisal, Market Study & Expense Analysis 70
Sitework & Landscaping 2,125
Professional Services Fees 80
Construction Costs 227,640 $ 104.41 23,768
Feasibitity Analysis Consultation 95
Construction Management 3.65% 1,014
Construction Analysis / Physical Needs Assess. 80
Entitlements and Govern. Profess. Services 115
Tax Credit Consulting 85
Architecture & Engineering 322 $ 2;329 750
JV Partner/Tax Credit Counsel 25
TCAC Fees 78
Permits, Fees 322 $ 27,859 8,971
Construction Period Financial Services 95
Subtotal - Production Costs 39,236
Contingency - Production Costs 4.00% 1,111
Total Production Costs 40,347
Fina.ncin.q Costs:
Housing Bond issuance Costs (Sedes A) 2.56% 832
Housing Bond Legal & Expenses Costs (Sedes A) 0.49% 160
Permanent Loan Fees & Costs 1~23% 399
Series A Bond Adminstration (dudng Constr, LU, Seasoning) 70
Series A Bonds (Int Rate Cap impounds during Constr & LU) 0.88% 284
CalPem Trans. Fee & Construction Put Fees 602
Interest - City Loan 174
Interest - CaIPERS 684
Subordinate Ground Lease - 808
Construction Loan Fees & Costs 1.14% 368
Construction Lender Credit Enhancement Fees 1.00% 821
Series A Bond Interest 0 1.70% 1,654
Series A Bond Investment Eamings 1.25%
Subtota~- Financing 6,621
Contingency - Financing 4.00% 265
Total Financing 6,886
· - Land Value Before Restrictions
This schedule is part of an integrated document and no one page should be mad without reading the other pages and the disclaimer contained on the last page of this schedule.
4
[ALL SCHEDULES ARE SUBJECT TO li~l~)'~[J~ ~rlgpr:k¢(~lt~[ariable June 17, 2003 Senior(City),xla Cost 6/18/2003 11:44 AM
KLEIN
FINANCIAL
CORPORATION
Fairway Ranch Apartments, Dublin CA Phase II - Senior * ·
Project Costs & Equity ,
(000's Omitted frorn $ Amounts', ' $ per sf Total
al/Unit or Unit ($000's)
Indire?t Costs:
Advisory Services and Other Prof Service.- 193
Insurance 257,640 0.60 155
Legal&Accounting 257,640 $ 2.19 565
Marketing Budget (including Oper Deficit) 75
R, E. Taxes 257,640 $ 0.58 150
Subtotal- Indirect Costs 1,138
Contingency - Indirect Costs 5,00% 57
Total Indirect Costs 1,195
Subtotal - Project Costs 64,508
Deyel0per Fee
Very Low Income Unit Development Fee 3.88% 2,500
Total Project Costs 67,008
Lease-up Costs (income) (1,50'7)
Net Project Costs 65,50'1
Sources of Funds (d,urin.q Co~structl.on and. Lease-up)
Series A Bond Financing (initial Funding Amount) 32,425
City Assistance 2,250
Accrued Interest - City Loan 174
Accrued Interest - CalPERS 168
Deferred Developer Fee 1,400
Accrued Subordinate Ground Lease 608
CaIPERS Mezz. Loan 2,000
Tax Credits - Admission Funding 2,383
Tax Credits - 75% Complete Funding 2,383
Tax Credits - Full Project Completion Funding 2,383
Additional Developer Equity 3,127
Subtotal Developer Equity 14,651
Equity - Via Land Value in Ground Lease 16,000
Total Developer Equity (Includes Tax Credit Equity) 30,651
Total Sources of Funds 65,50'1
Sources of Funds (at stabilizatlon~ Final Bond Funding, and Final Tax Credit Fundin.q)
Sedes A Bond 32,425
Cash Flow Required To Fund Project Costs 1,082
City Assistance 2,250
Accrued Interest - City Loan 174
Accrued Interest - CalPERS 168
Accrued Subordinate Ground Lease 808
Deferred Developer Fee 1,400
CalPERS Mezz. Loan 2,000
Tax Credits - Admission Funding 2,383
Tax Credits - 75% Complete Funding 2,383
Tax Credits - Full Project Completion Funding 2,383
Tax Credits - Final Funding 794
Tax Credit Investor Operating Reserve (197)
Developer Equity 1,447
Subtotal Developer Equity 13,401
Equity - Via Land Value hr Ground Lease 16,000
Total Developer Equity (Includes Tax Credit Equity 29,401
Total Sources of Funds 65,501
This schedule is part of an integrated document and no one page should be read without reading the other pages and the disclaimer contained on the last page of this schedule.
5
KLEIN FINANCIAL CORPORATION IALL SCHEDULES ARE SUBJECT TO I~d~[~§i~- ~,r~l~:r~'J~[ariable Juno 17, 2003 Senior(City).xls Cost 6/18/2003 11:44 AM
Fairway Ranch Apartments, Dublin CA Phase II - Senior
Project Costs & Equity
(000% Omitted from $ Amounts; $ per sf Total
sf/Unit or Unit ($000's)
Tax Credit Calculation:
Total Eligible Basis 144,9261
Threshotd Basis Limitation
adjustment: Permits & Fees
High Cost Area Factor 30.00%
Total Adjusted Eligible Basis
Applicable Fraction 46.30%t 27,039 I
Applicable Percentage 0.0338 [ 914 I
10 Years of Tax Credits 10 I 9,139~
Amount of Credits Sold
Sales Price per $1.00 of Credits $ 0.870
Applicable Fraction includes 0 additional affordable units as a cushion
Tax Credit Fundinq Schedule:
Construction Loan Closing (Admission) ~
75% Completion
100% Complete
Stabilization (110% Debt Service Coverage 8609's
This schedule is pad of an integrated document and no one page should be road without reading the other pages and the disclaimer contained on the last page of this schedule.
7
6/18/2003 11:44 AM Dublin Apartments Pro Forma variable June 17, 2003 Senior(City).xts 15 yr
KLEIN FINANCIAL CORPORATION
FairwaY15 Year CashRanChFIowApartments' Dublin CA Phase 11 - SentoI ALL SCHEDULES ARE SUBJECT TO BOND COUNSEL APPROVAL I I
(000'a Omitted from $ Amounts)
Rent Bumps 2.50% *
Operating Expense CPI 3.50% *
Property Tax CPI 2.00%
Stabilized Year I 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Beginning Jan-07 Jan-08 Jan-06 Jan-10 Jan-Il Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan.17 Jan-18 Jan-19 Jan-20 Jan-21
Rental Income - Apartments 4,643 4,759 4,878 5,000 5.125 5,253 5,384 5,519 5,657 5,798 5,943 6,092 6,244 6.400 6,560
Rental Income - Other (Real Estate Related) t10 113 116 119 122 125 126 131 134 138 141 145 148 152 156
Gross Scheduled Income 4,753 4,872 4,994 5,119 5,247 5,378 5,5t2 5,650 ' 5,791 5,936 6,0a4 6,237 6,392 6,552 8,716
Vacancy / Credit Leas 5.00% 123~) (244) (250) (256) 1262) (269~ (2/'6) (282) (290) (297) ($0,1) (~ 12) {320) (328) (336)
Effective Gross Income (EGI) 4~516 4~628 4,744 4~863 4;984 5~109' 5~237 5~367 5~502 5~639 5~780 ~ 925 6~073 6,225 6~380
Operating Expenses (1,13,1) i~,173) (1,214) (1.257) (1,30t) (1,3'46) ('t~393) (1,'442) (1,4~3) (1',545) (1,599) (1,655) (1,713) (1,773) (1,835)
Capital Replacement Reserve $200 (64) [67) (89) (71) (74) (76) (79) (82) (85) (88) (9~) (94) (97) (101) (104)
Taxes and Assessments (341) (346) (355) (362) (369) 376) (384) 302) (400). (408 (4~6) (424) (432) (441) (450)
TotaIOperating Expenses '-(1;~39) (1,586) ' (1,638) (1,690) (1,744) (1,799) (1.857) (?,918) (1,977) (2,046) (2,1'06)' (2,173) (2,243) (2,315) (2,389)
Net Operating income (NOI} 2,977 3,041 3,106 3,t73 3,240 3,310 3',380 3,452 3,525 ' 3,599 3,675 3,752 3,830 3,910 3,991
Debt Service (Series A)I (1,938) (1 944) (1,950) (1,957) (1,96.1) (I,971) (1,979) (t,987) (1,996) (2,006) (2,016) (2.027) (2,038) (2,051) (2,064)
Interest Rate Cap Contribution 0.20% (85) (65) (55) (65) (65) (65) (65) (65) (65) (65) (65) (65) (65) (65) (65)
Tax Credit Investor Administrative Fee (22) (23) (23) (24) (25) (26) (27) (28) (29) (30) (31) (32) (33) (34) (35)
Partnership/Acct./Tax Returus/Admin, (24) (25). (25) (26) (27) (28) (28) (29) (30) (31) (32) (33) (34) (35) (36)
Subordinate Management Fee (60) (60) (60) (60) (60) (102) (105) (I0'?) (110) (t131 (116) (118) (121) (124) (126
Net Cash Flow 868 92~.~ 983 1,041 1,100 1,118 1,176 1,235 1,294 1,355' 1,4t5 1,477 1,539 1,601 1,664
City Assistance Payment 0 (653) (876) (898) 0 0 0 0 0 0 0 0 0 0 0
CarPERS Interest Payment/Return of Principa[ (651) (694) (737) (781) (22) 0 0 0 0 0 0 0 0 0 0
Owner Contribution ' 0 853 876' 898 0 0 0 0 0 0 0 0 0 0 0
O~nei'Cofltribution Repayment ~ 0 0 0 0 (803) (839). (6~82) (10.4) 0 0 0 0 0 0 0
-~)'eferred Develope~: Fee P~y~hent (2t7) (231) (246) (260) (275)- (1'71) 0 0 0 0 0 0 0 0 0
Subordinate Ground Lease 0 0 0 0 0 0 0 (823) (971) (1,016) (1,062) (!,I0_7) (1,154) (1.201) (1,_24.~L
Net Cash Flow (0) 0 0 0 0 109 294 309 324 339 354 .~69 385 400 416
Debt Service Coverage 1.536 1.564 1.593 1.621 1.650 1.679 1.708 1.737 1.765 1.794 1.823 1.851 1,879 1,907 1.934
CalPERS Mezz. Loan
Beginning Balance 2,168 1,777 1,296 715 20
Interest Accrual 12.00% 260 213 156 86 2
Interest Payments/Return of Principal (651) (69_~. (737) (781) (22) ~
Ending Balance 1,777 1,296 715 20
City Assistance*
Beginning Balance 2,424 2,492 1,706 876
Interest Accrual 3,000% 68 68 45 23
Payments - Principal (750) (750) (750)
Payments - Interest (103) (126) (148)
Ending Balancs · , 2,492 ~,706 876 '
Deferred Deve!oper Fee
Beginning Balance 1,400 1,183 952 706 446 171
Interest Accrual (;17)~ (231) ' (;46) (;60) (275) (171) ~
Payment
Ending Balance 1,183 952 766 446 171 '
Debt service for 15 yr. Cash flow is calculated based on an assumed 5.0% variable rate plus the stack including issuer and trustee fee.
This schedule is pad of an integrated document and no one page should be read without reading the ether pages and the disclaimer contained on this schedule.
8
6/18/2003 11:44 AM Dublin Apartments Pro Forma variable June 17. 2003 Senior(Clty).xls Rentmll
KLEIN FINANCIAL CORPORATIOI~ ~ALL SCHEDULES ARE SUBJECT TO BOND COUNSEL APPROVAL I
Fairway Ranch Apartments, Dublin CA Phase tl - Seni~
Residential Apartment Rent Ro 1
2005 2004 200.~ 2004 200~ 2004 2005 2004
50% 50% 60"/, 60"/, 120°/~ 120%
MEDIAN MEDIAN MEDIAi~ MEDIAN MEDIAI~ MEDIAN
VERY 120% VERY LOW VERY LOW LOV~ LOW LOV~ LOW NON- NON-
LOW LOW MEDIAN MARKET INCOME INCOME INCOME INCOME INCOME INCOMERESTRICTED RE$¥RIC~aD
INCOME INCOME INCOME RATE # OF TOTAL RENT RENT RENT RENT RENT RENT RENT RENT
UNIT TYPE PLAN BEDS SQ. FT. UNITS UNITS UNITS UNITS UNITS SQ. FT. PER UNITPER UNIT PER UNITPER UNiT PER UNIT PER UNITPER UNIT PER UNIT
111 F t 575 65 37 0 0 102 58,650 31.66% $ 740 $ 716 $ 895 $ 860 1,175 $ 1,140 $ 1,237 $ 1,200
111 F2 1 673 0 0 55 25 80 53,640 24.64% $ 740 $ 718 $ 095 $ 668 1,239 $ 1,202 $ 1,304 $ 1,265
2/2 G 2 767 0 60 0 0 60 47,220 10.63% $ 687 $ 860 $ 1,072 $ 1,040 1,371 $ 1,330 $ 1,443 $ 1,400
2/2 G2 2 846 0 0 76 4 60 67,600 24.84% $ - 607 $ 860 $ 1,072 $ 1,046 1,494 $ 1,449 $ 1,572 $ t,525
TOTALS 65 97 131 , ~9, 322 ' 227,,390, 100.00%
Average S.F. per unit 706 $ 1,200
3omr~arison of Very Low Income Restricle~l Unit Rent Guidelines
2004 Non
2004 2004 projected Restricted Maximu~
assumed TCAC Issuer Bond Net rents VLI
Family Gross Restricted Gross ut0ity Restrictive pre net
PLAN BEDS Size rents rents rents allow Rents construct rents
F I 1.5 751 801 33.00 710 1,200 718
F2 1 1.5 751 801 33.00 718 1.265 718
G 2 3.0 901 901 41.00 660 1.400 860
G2 2 3.0 901 901 41.00 860 1,525 860
eslimal~ o~ V~ry L~v~ !n!:0me Tax Exempt Multi-family Igond Rent Reslrictions
2004
30.00%
assumed 50.00% · Bond
Family Income Gross
PLAN BEDS Size Level rents
F I 2 32,050 801
F2 t 2 32,050 501
G 2 3 36,050 901
G2 2 3 36.050 901
This schedule is part of an integrated documeht and no one page should be read without reading the other pages and tho disclaimer contained on the last page of this schedulo. (~-~'~
10
6/18/2003 11;44 AM Dublin Apariments Pro Forma variable June 17, 2003 Senior(CibJ).xls Rentroll
KLEIN FINANCIAL CORPORATIOI', AL[. SCHEDULES ARE SUBJECT TO BOND COUNSEL APPROVAL
Fairway Ranch Apartments, Dublin CA Phase II - Seni, 1
Residential Apartment Rent Ro
C~mDarison of Low Income Restricted Unit Rent G,~idelines
2004 Non
2004 2004 projected Restricted Maximum
assumed TCAC Issuer Bond Net rents
Family Gross Restricted Gross ut[lilt Restrictive pre uet
PLANBEDS Size rel~Ls rents rents allow Rentsconstrucl rents
F 1 1.5 901 902 33.00 868 1,200 868
F2 1 · 1.5 901 962 33.00 868 1,265
G 2 3.0 1,0§1 1,082 41.00 1,040 1,400 1,040
G2 2 3.0 1,081 1,082 41.00 1,040 1,525 1,040
~stimate of Low Income Tax Exemot Multi-family Bond Rent Restrictions
2004
30.00%
assumed 60.00% Bond
Family Income Gross
PLAN BEDS Size Level rents
F 1 2 38,460 962
F2 I 2 38,460 962
0 I 2 38,460 962
O 2 3 43,260 1,082
G2 2 3 43,260 1,082
0 2 3 43,260 1,082
0 3 4 48,060 1,202
Comparison of 120% Moderate Income Restricted Unit Rent Guidelines
2004 2004
assumed Maximum City rent 30% 95%of2003 use Net
Family income of Income Non Rest. lowest utility Restrictive
PLANBEDS Bize Level rents Rents Rents a0ow Rents
F 1 2.0 78,920 1,923 1,140 1,140 0.00 1,140 Assumes no utility atlow, req.
F2 1 2.0 76,920 1,923 1,202 1,202 0.00 1,202 Assumes no utility allow, req.
G 2 3.0 86,520 2,163 1,330 1,330 0.00 1,330 Assumes no uflgty allow, req.
G2 2 3.0 86,520 2,163 1,449 1,449 0.00 1,449 Assumes no utility allow, req,
This schedule is part of an integrated document and Ilo one page should be read wilhout reading the other pages and the disclaimer contained on the last page of this schedule.
11
G/18/2003 11:44 AM Dublin Apadmenls Pro Forma variable June 17, 2003 Senior(City).xls Rentroll
KLEIN FINANCIAL CORPORATIOt~ ~ALL SCHEDULES ARE SUBJECT TO BOND COUNSEL APPROVAL ~
Fallway Ranch Apartments, Dublin CA Phase II - Seni~ 1
Residential Apartment Rent Re
~te of Utility Allowances for Restricted Units:
Per
Gas Other County
Gas Water Air Gas Electric Garbage &Schedule Proposed
PLANBEDSCooking Heath]g Condition Heat&Lighls Water Sewer Total~ TDtal
F t te~nl owner tenant tenant tenant owner owner 33.00 33.00
1 tenant tenant tenanttenant 33.0g 33.00
F2 owner owner owner
G 2 tenant owner tenant tenanttenant owner owner 41,00 41.00
G2 2 tenant owner tenant tenanttenant owner owner 41.00 41.00
DISCLAIMER: THE PRO~ORMA OPERATING STATEMENTS, DEVELOPMENT BUDGETS, AND/OR {~STIMATES OR RETURNS ON INVESTMENT
CONTAINED HEREIN ARE BASED UPON PROJECTIONS AND ASSUMPTIONS WHICH ARE SUBJECT TO CHANGES IN MARKET AND/OR ECONOMIC CONDITIONS OR
OPERATIONAL REQUIREMENTS SPECIFIC TO THE PROJECT AND/OR THE LENDERS OR OWNERS. NO REPRESENTATIONS OR WARRANTY IS MADE THAT THE PROJECTIONS
OR ESTIMATES CONTAINED HEREIN WiLL REFLECT ACTUAL RESULTS. ACTUAL RESULTS MAY BE SIGNIFICANTLY BETTER OR WORSE THAN THESE PROJECTIONS.
INVESTMENT IN REAL ESTATE OF THIS NATURE IS SPECULAT[VE AND CARRIES A SUBSTANTIAL DEGREE OF RISK AND INVESTORS SHOULD OBTAIN INDEPENDENT
RESEARCH AND CONSULTATION AS TO THE SUBJECT MATI'ER PRESENTED HEREIN AND NOT UTILIZE THE INFORMATION CONTAINED IN THESE PROFORMAS WITHOUT
CONSIDERING ALTERNATIVE OUTCOMES CREATING SIGNIFICANTLY BE1TER RESULTS OR A MAJOR AND/OR COMPLETE LOSS. THiS DISCLAIMER IS APPLICABLE TO
SUMMARY AND ALL DETAILED PROJECTIONS AS WELL AS ALL CORRESPONDENCE AND DISCUSS[ONS ON THIS iNVESTMENT.
This schedule is part of an integrated document and no one page should be read without reading the ether pages and the disclaimer contained on the last page of this schedule.
12
6/18/2003 11:38 AM Dublin Apartments Pro Forma variable June 17, 2003 Family(City).xls Other Income
KLEIN FINANCIAL CORPORATION
Fairway Ranch Apartments, Dublin CA Phase 1 IALL SCHEDULES ARE SUBJECT TO BOND COUNSEL APPROVAL
Estimate of Other Income (includes Cable & Communication Revenue)
Annual
Account Name Total
LAUNDRY/VENDING 304 $ 6.00 $ 21,888
OTHER MISCELLANEOUS INCOME $ 18,000
PARKING INCOME (garages) 85 $ 60.00 $ 61,200
TOTAL OTHER RENTAL INCOME $10t,088
DISCLAIMER: THE PROFORMA OPERATING STATEMENTS, DEVELOPMENT BUDGETS, AND/OR ESTIMATES OR RETURNS ON INVESTMENT
CONTAINED HEREIN ARE BASED UPON PROJECTIONS AND ASSUMPTIONS WHICH ARE SUBJECT TO CHANGES IN MARKET AND/OR ECONOMIC CONDITIONS OR
OPERATIONAL REQUIREMENTS SPECIFIC TO THE PROJECT AND/OR THE LENDERS OR OWNERS. NO REPRESENTATIONS OR WARRANTY IS MADE THAT THE PROJECTIONS
OR ESTIMATES CONTAINED HEREIN WILL REFLECT ACTUAL RESULTS. ACTUAL RESULTS MAY BE SIGNIFICANTLY BETTER OR WORSE THAN THESE PROJECTIONS.
INVESTMENT IN REAL ESTATE OF THIS NATURE IS SPECULATIVE AND CARRIES A SUBSTANTIAL DEGREE OF RISK AND INVESTORS SHOULD OBTAIN INDEPENDENT
RESEARCH AND CONSULTATION AS TO THE SUBJECT MATTER PRESENTED HEREIN AND NOT UTILIZE THE INFORMATION CONTAINED IN 'THESE PROFORMAS WITHOUT
CONSIDERING ALTERNATIVE OUTCOMES CREATING SIGNIFICANTLY BETTER RESULTS OR A MAJOR AND/OR COMPLETE LOSS. THIS DISCLAIMER IS APPLICABLE TO
SUMMARY AND ALL DETAILED PROJECTIONS AS WELL AS ALL CORRESPONDENCE AND DISCUSSIONS ON THIS INVESTMENT.
This schedule is part of an intergrated document and no one page should be read without reading the other pages and the disclaimer contained on the last page of this schedule. ~ .....
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