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Home My WebLink About20140421 ltr to assessor - signedLaw Offices of GREGORY PERKINS LLc Vail Spa Building 710 West Lionshead Circle, Suite B Vail, Colorado 81657 Telecopier: 866.393.9835 GREGORY W. PERKINS DIRECT: 970.306.7554 EMAIL: greg@gperkinslaw.com April 21, 2014 VIA ELECTONIC MAIL Mark D. Chapin Eagle County Assessor's Office P.O. Box 449 500 Broadway Eagle, CO 81631 RE: Timber Ridge Housing Project, Property Tax Exemption Dear Mark: Eu7ABE H C. GROSS DIRECT: 970.686.5023 EMAIL: elizabeth @gperkinslaw.com As you know, this office serves as legal counsel to a potential developer of a portion of the Timber Ridge property. I am writing on behalf of that client in follow up to your letter dated December 9, 2013, regarding determination of a property tax exemption. In order to clearly set forth the structure of the transaction that will permit your determination of a property tax exemption, the attached Agreement Regarding Lion's Ridge Apartment Homes Project ( "Agreement") has been agreed to and signed by the Developer, the Town of Vail, and the Vail Local Housing Authority ( "Authority "). Importantly, a copy of the Pre - Development Agreement related to this project is attached as Exhibit B to the Agreement. We believe that the structure of this transaction, including the facts that VLHA will own an interest in the development entity and that ownership of all improvements constructed as part of the development will revert to the Town upon the conclusion of the ground lease, satisfy the terms of your letter dated December 9, 2013, titled "Re: Timber Ridge Housing Project". We would appreciate your execution of this letter below to acknowledge that fact and assure the developer, any lender and any investor in the development project that, assuming the terms of the Agreement are satisfied, the development will be entitled to exemption from property taxes pursuant to CRS § 29 -4 -227. Please let us know if you have any questions or would like to discuss further GREGORY PERKINS LAC Mark D. Chapin April 21, 2014 Page 2 of 2 Thank you. Sincerely, Joe Gregory W. Perkins cc: Matt Mire, Vail Town Attorney Jen Wright Gary Gorman Bill Cummings ACKNOWLEDGED AND AGREED, this as day of April, 2014. Mark D. Chapin Eagle County Assessor 0ro.�p 0 �OL43OAdgcd 44s MARY J. KESSLER NOTARY PUBLIC STATE OF COLORADO NOTARY ID 20084011864 MY COMMISSION EXPIRES APRIL 8, 2016 AGREEMENT REGARDING LION'S RIDGE APARTMENT HOMES PROJECT THIS AGREEMENT is dated as of February 21, 2014 among GORMAN EMPLOYEE GROUP LION'S RIDGE, LLC ( "Gorman "), WRIGHT AND COMPANY, INC. ( "Wright "), the TOWN OF VAIL, COLORADO (the "Town ") and VAIL LOCAL HOUSING AUTHORITY (the "Authority "). RECITALS The parties hereto acknowledge the following: A. The Timber Ridge Affordable Housing Corporation ( "TRAHC ") is the owner of certain real property generally described as the eastern half of the Timber Ridge property and more particularly described on Exhibit A attached hereto and incorporated herein (the "Property "). B. The Town and Gorman & Company, Inc. ( "Gorman & Company ") have entered into a pre - development agreement dated as of November 4, 2013 (the "Pre- Development Agreement ") pursuant to which the Town and Gorman & Company have set forth certain agreements regarding the development of the Property. A copy of the Pre - Development Agreement is attached hereto as Exhibit B. The Pre - Development Agreement will be replaced in its entirety by a final Development Agreement, but the Pre - Development Agreement is attached hereto for informational purposes only. C. At a point prior to entry into the Ground Lease (as such terra is defined in the Pre - Development Agreement), TRAHC will convey the Property to the Town. D. Gorman & Company intends to assign its interest in the Pre - Development Agreement to Lion's Ridge Apartment Homes, LLC (the "Project Owner ") as allowed by the terms of Section 13 of the Pre - Development Agreement. The Project Owner will be the developer of the Property and will be the tenant under the Ground Lease. E. The members of the Project Owner will be Gorman, Wright, an equity investor (the "Investor ") and the Authority. The parties hereto desire to set forth in writing certain agreements regarding the Project Owner and the development of the Property. AGREEMENTS In consideration of the Recitals and mutual agreements that follow, the parties hereto agree as follows: I . Gorman and Wright shall cause the Project Owner to be formed on or before the Closing Date (as defined in Section 3 below). On the Closing Date, Gorman, Wright, the Authority and the Investor shall execute and deliver an operating agreement for the Project Owner (the "Operating Agreement "). The Operating Agreement must be in a form satisfactory to Gorman, Wright, the Authority and the Investor. Gorman, Wright and the Authority shall 11079792 exercise good faith in negotiating the terms of the Operating Agreement. The Operating Agreement shall provide that the Authority will have a membership interest of one -tenth of one percent (0.1 %) of the Project Owner. The Authority shall be a special member of the Project Owner and shall not have any consent or voting rights under the Operating Agreement; however, the Operating Agreement may not be amended in any manner that would adversely affect the Authority unless the Authority consents thereto in writing. The Operating Agreement shall further provide that Gorman and Wright shall indemnify, defend and hold the Authority harmless from and against any and all claims, costs, damages, expenses, liabilities and losses including, without limitation, reasonable attorneys' fees, (collectively, "Costs ") in any way arising out of or resulting from the Authority being a special member of the Company except to the extent the Costs arise out of or result from the Authority's negligence, misconduct or failure to comply with the terms of the Operating Agreement. 2. The Authority acknowledges that Gorman and Wright have not yet identified who the Investor will be. Gorman and Wright shall notify the Authority as soon as they have determined who the Investor will be. 3. The "Closing Date" means the date on which (a) Gorman, Wright, the Authority and the Investor have executed and delivered the Operating Agreement and (b) the Town and the Project Owner have executed and delivered the Ground Lease. The parties contemplate that the Closing Date will occur on or before April 1, 2014. 4. The Property will be developed as employee housing. The parties intend that the Property will be exempt from real estate taxation as a result of the Authority being a special member of the Project Owner. The Town and the Authority shall cooperate in good faith with Gorman and Wright to ensure that such property tax exemption is obtained, provided, however, that such cooperation shall not require the Town or the Authority to incur any expense. 5. Gorman and Wright may terminate this Agreement at any time upon written notice to the Town and the Authority in the event Gorman and Wright determine that the development of the Property is not feasible for any reason including, without limitation, their failure to obtain an Investor, construction financing and/or permanent financing on terms acceptable to them. This Agreement shall also terminate automatically in the event the Closing Date has not occurred on or before August 15, 2014. b. This Agreement may be amended only by a writing signed by all of the parties hereto and shall be binding upon and inure to the benefit of the parties hereto and their successors and assigns. 7. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which shall be deemed one and the same instrument. Signatures sent via facsimile or e-mail transmission shall be deemed original signatures for purposes of creating a binding Agreement. 8. Governing_ Law and Venue. This Agreement shall be governed by the laws of the State of Colorado, and any legal action concerning the provisions hereof shall be brought in Eagle County, Colorado. 11079792 2 9. Third Parties. There are no intended third -party beneficiaries to this Agreement. 10. Governmental Immunity. The Town and the Authority and their respective officers, attorneys and employees, are relying on, and do not waive or intend to waive by any provision of this Agreement, the monetary limitations or any other rights, immunities, and protections provided by the Colorado Governmental Immunity Act, C.R.S. § 24 -10 -101, el seq as amended, or otherwise available to the Town and its officers, attorneys or employees or the Authority and its officers, attorneys or employees. 11. Subject to Annual Appropriation. Consistent with Article X, § 20 of the Colorado Constitution, any financial obligation of the Town or the Authority (to the extent the Authority may be subject to Article X, § 20) not performed during the current fiscal year is subject to annual appropriation, shall extend only to monies currently appropriated, and shall not constitute a mandatory charge, requirement, debt or liability beyond the current fiscal year. [Signatures on next page] 11079792 GORMAN EMPIYEE GROUPN'S RIDGE, LLC ' I J BY GOR-f AV & COMP kNY,/INC., BY fW Gary J. WRIGHT AND CO PANY, INC. BY "'vu l� Willis J. Wr' ht, Jr., TOWN Of VAIL, COLORADO BY -2;L' Stan mler, Town Manager VAIL LOCAL,MOUSING AUTHORITY BY........... Its -- - 4 cf. r,s 11079792 4 EXHIBIT A Legal Description of Property Lot 2, Timber Ridge Subdivision, A Resubdivision of Lion's Ridge Subdivision, Block C, A Resubdivision of Lots 1, 2, 3, 4 & 5, according to the plat thereof recorded on February 21, 2014 as Reception No. 201402611, Town of Vail, County of Eagle, State of Colorado. 11079792 EXHIBIT B Pre - Development Agreement [Att.ached] 11079792 PRE-DEVELOPMENT AGREEMENT THIS PRE - DEVELOPMENT AGREEMENT (the "Agreement") is made this day of 2013 (the "Effective Date), by and between the Town of Vail, Colorado, a Colorado home rule municipality, (the "Town ") and Gorman & Company, Inc., a Wisconsin corporation ("Developer'), (individually a "Party" and collectively the "Parties "). WHEREAS, the Town is the owner of certain real property generally described as the eastern half of the Timber Ridge property and more particularly described in Exhibit A attached hereto and incorporated herein by this reference (the'Troperty"); WHEREAS, the Parties desire to redevelop the Property consistent with the Housing zone district; WHEREAS, to accomplish the redevelopment of the Property, the Town would retain fee ownership of the Property, but would provide Developer with a long -term ground lease of the Property; and WHEREAS, the Parties wish to establish terms of the development of the Property. NOW, THEREFORE, for and in consideration of the mutual promises and covenants contained herein, the sufficiency of which is mutually acknowledged, the Parties agree as follows: I . Exclusive Qption. During the term of this Agreement and subject to all of its terms, Developer shall have the exclusive option to redevelop the Property for employee housing as provided in this Agreement. 2. P§MMeters ofDevelo ment. The redevelopment ofthe Property (the "Development') shall be subject to the execution of a mutually acceptable development improvement agreement ( "DIA "). The Development shall meet the following parameters, which shall be further detailed and refined in the DIA: a. The Development shall at all times be subject to the Vail Town Code. b. The Town shall provide the Developer with a long-term ground lease of the Property, with a term of thirty-five (35) years (the "Ground Lease'7. The rent shall be one dollar ($1,00) per year, and there shall be no security deposit. The farm ofthe Ground Lease must be mutually acceptable to the Town and Developer. All improvements constructed on the Property shall be owned by Developer; provided that, Developer may grant to the Town or its housing authority an interest in Developer, which percentage interest shall be the minimum percentage allowable under Colorado law to obtain property tax exemption on the Property and all improvements. a Upon termination of the Ground Lease, Developer shall surrender to the Town, free and clear of all debt and other encumbrances, all improvements, inclusions, fixtures, equipment and other appurtenances on the Property in good condition and repair. 111*2013 Q: IUSERMYAWTIAMER R1D09- N8WWGMPRE- DMJ.D0C During the term of the Ground Lease, the Town shall have a right to inspect the Property on an annual basis to review the condition of the improvements. d. The Development shall include at least one hundred eight (108) dwelling units. At least seventy percent (70 %) of the dwelling units in the Development shall be employee housing units , as the term "employee" is defined in Section 12 -2 -2 of the Vail Town Code. e. Except as otherwise expressly provided herein, Developer shall be solely responsible for all improvements on the property, including construction, maintenance and repairs. Developer shall be solely responsible for all expenses of operating the Property, including insurance and utility costs. f. The Ground Lease shall be for the Property "as is," though the Town has no actual knowledge of the presence ofany hazardous materials or other adverse environmental conditions on the Property. g. Developer may convey equity interests in its limited liability company entity without the Town's consent, provided that any assignment ofthis Agreement or any rights or obligations hereunder shall be subject to Section 13 hereof. h. The Property shall be subject to a deed restriction (the "Deed Restriction") requiring at least seventy percent (70 9/o) of the dwelling units in the Development to be employee housing units capable ofhousing employees, as the term "employee" is defined in Section 12-2-2 of the Vail Town Code. The form of such Deed Restriction must be mutually acceptable to the Town and Developer. i. Developer shall be solely responsible to procure financing for the Development. Developer may encumber its leasehold interest in the Ground Lrm in connection with tho initial financing for the Development and any refinancing during the term of the Ground Lease. If a lender (whether the initial lender or a lender in connection with any refinancing) requires the Town to subordinate its fee interest in the Propertyto the lender's mortgage, the Town will do so provided that: (a) at all times the Deed Restriction shall be first and prior to the mortgage: and (b) the Town shall have a fast and prior right to cure any deficiency to protect its fee interest in the Property. If Developer wishes to use federal funds for the Development, it shall be Developer's sole responsibility to procure such funds, j. Developer shall conduct at least one pre - application conference with the Town Council prior to submitting its initial application for the Development, Such pre - application conference is an opportunity for Developer to hear comments from the Town Council concerning the_ Devel_pment, but the Town shall not be hound by any such comments, and any reliance on such comments shall be at Developer's own risk. k. Developer shall submit to the Town a development application for the Development on or before November 29, 2013. The development application must be 2 lliaaaM Q.1WEPStiVAIL MAMER RIDGE- NEW1AOR1PR8- DJA -5.DOC consented to and signed by the Town, because the Town will remain the fee owner of the Property. 1. At no time shall the Development eliminate access to or the ability to safely occupy or operate the Timber Ridge housing units currently existing on the real property adjacent to the Property, as more particularly described on Exhibit B, attached hereto and incorporated herein by this reference (the "Adjacent Property"), and the Ground Lease shall provide the Town with unrestricted access to the Adjacent Property at all times. M. Developer shall be responsible for construction of any public improvements necessary for the Development, including streets, sidewalks and utilities. n. Income from the Development shall be distributed in the following order of priority: (1) To pay all Development costs and operating and maintenance expenses, including without limitation property management fees and the Development Fee described in Section 3 hereof. (2) To pay principal and interest on Development debt. (3) To fund any reserves required by any lender related to the Development (each a "Lender Reserve" }, (4) To pay the required return on investment to any equity investors in the Development. (5) To fund a project reserve (the "Project Reserve', which shall be used for any shortfalls in subsections (1) -(4) above. Upon termination of the Ground Lease, if any amounts remain in the Project Reserve or any Lender Reserve, such amounts shall be remitted to the Town, ! (6) In the event all Lender Reserves are fully funded in the amount required by the lender, and the amount of the project Reserve is at least $150,000, any amount in excess of $150,000 shall be distributed fifty percent (50 °10) to the Town and fifty percent (50014) to the Developer. 3. Develo ment Fee. Developer shall be entitled to a development fee (the I "Development Fee") in connection with its development of the Property. The amount of the Development Fee shall not exceed the maximum development fee allowed by the Colorado Housing and Finance Authority under its qualified allocation plan adopted on October 25, 2012 and approved by the governor on January 16, 2013. The Development Fee may be paid from any Project sources including, without limita-ttow; *debt- roe ls; equity proceeds, and-income from the Development, 1114/2013 Q.gUSERSIVAIL UMBER RIDGE -NEW OR1PRE- Dl.I,5.DOC 4. Town Obligations. a. The Town shall be responsible for all costs associated with any necessary rockfall mitigation. b. The Town shall work with Developer and the Colorado Department of Transportation ( "CDOT ") to resolve roadway issues related to the Development; provided that Developer shall be responsible for the cost of any additional tum lanes on the Frontage Road necessitated by the Development. C. The Town shall grant to Developer, for the benefit of the Property, easements across the Adjacent Property that are mutually determined to be necessary for the Development; including without limitation utility, drainage, and access easements; provided, however, that no such easements will have a material adverse effect on the operation ofthe Adjacent Property. d. The Town shall cause any existing liens and encumbrances on the Pwpertyto be released in order to facilitate Developer's financing. e. The Town shall refund one hundred percent (100 %) of all amounts paid by the Developer for the Town's construction and building materials use tax applicable to the Property. Developer shall be responsible for all demolition and building permit fees for permits issued by the Town in connection with the Development. In addition, the Town shall impose typical and customary plan review fees for review of all plans for the Property, and Developer shall be responsible for payment of such fees. f. The Town shall use its best efforts to help Developer obtain an exemption from property taxes for the Development from all taxing authorities. To the extent the Property is not tax- exempt, the Town shall refund one hundred percent (1000/6) of any property taxes, net of the Eagle County Treasurer's fee, collected by the Town on the Property or improvements thereon. 5. Due Diligence. During the term of this Agreement, Developer shall conduct all due diligence necessary to determine whether the Property is suitable for the Development, at Developer's sole cost. 6. Terns and Termination. This Agreement shall commence upon the Effective Date and terminate on August 15, 2014 (unless such date is extended by mutual agreement of the Parties); provided that Developer may terminate this Agreement earlier than such date upon thirty (30) days written notice to the Town. 7. Costs. Except as otherwise set forth herein, each Party shall be responsible for its own costs under this Agreement; - 8. Modification. This Agreement may only be modified by subsequent written agreement of the Parties. UN20I J Q: IU SERMY AfL1TJAMERRWGE- NEWUGRWRE -DIA KWC 9. Integration. This Agreement and any attached exhibits constitute the entire agreement between Developer and the Town, superseding all prior oral or written communications. 10. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and assigns. 11. Severability. If any provision of this Agreement is determined to be void by a court of competent jurisdiction, such determination shall not affect any other provision hereof, and all of the other provisions shall remain in full force and effect, 12. Governing Law and Venue. This Agreement shall be governed by the laws of the State of Colorado, and any legal action concerning the provisions hereof shall be brought in Eagle County, Colorado. 13. Assignnment. There shall be no transfer or assignment of any of the rights or obligations of Developer under this Agreement without the prior written approval of the Town; provided, however, that Developer may make a single assignment of this Agreement to a limited liability company in which Developer is a member without such prior written approval. Developer shall provide the Town with written notice of such assignment within thirty (30) days thereof. 14. Third Parties. There are no intended third -party beneficiaries to this Agreement. 15. Contin enc • No Debt. Pursuant to Article X, § 24 of the Colorado constitution, any financial obligations of the Town under this Agreement are specifically contingent upon annual appropriation offunds sufficient to perform such obligations. This Agreement shall never constitute a debt or obligation of the Town within any statutory or constitutional provision. lb. No Joint Venture. Notwithstanding any provision hereof, the Town shall never be a joint venture in any private entity or activity which participates in this Agreement, and the Town shall never be liable or responsible for any debt or obligation of any participant in this Agreement. WHEREFORE, the parties hereto have executed this Agreement on the day and year first above written. A ST: ammyN terim To n Cle k APPROVED AS TO FORM: J. Matthew Mire, Town Attomey ;tOF VAP6, COLORADO SAIcrnler, Town Manager SEA If JLJ Q ;4USNMAIL1TIAMEAAIDGE- NEWUGRlPJ - DU-J.11pC By: Name: Its: STATE OF CMj5ftM } COUNTY OF ) The foregoin g instrument m t was subscribed, sworn to, and acknowledged before e this day of �} _, 2013, by &r2�, as the of Gorman & company, Inc.. My commission expires: (S E A L) Notary lie G !!/412013 Q. IUSBRM MAITlAMER R1DGMEW4 CrR4PWDL! -3.UX