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HomeMy WebLinkAboutR-2005-052 Yakima Hotel, LLC Modification to Conditional Approval Letter (re: Yakima Hilton Garden Inn Hotel)RESOLUTION NO. R-2005- 52 A RESOLUTION Authorizing the City Manager to execute a modification of the Conditional Approval letter, granting a 30 -day extension for closing of a Section 108 loan to Yakima Hotel, LLC to construct a Hilton Garden Inn Hotel. WHEREAS, the City of Yakima has been awarded HUD Section 108 loan funds to carry out eligible economic development activities; and WHEREAS, the City Council approved a loan for $3,560,000 to Joseph R. Morrier and Elizabeth Morrier, dba Yakima Hotel, LLC (the developer), on November 16, 2004 to construct a Hilton Garden Inn Hotel at 401 East Yakima Avenue; and WHEREAS, the City provided and executed a Conditional Approval Letter on December 7, 2004, that describes the terms and conditions to be met by the developer prior to loan closing; and WHEREAS, the Conditional Approval Letter also provides a deadline to meet the conditions and execute loan documents of April 15, 2005, unless approved in writing by the City; and WHEREAS, Joseph R. Morrier and Elizabeth Morrier, as guarantors, accepted and signed the Conditional Approval Letter on December 14, 2005; and WHEREAS, closing of the Section 108 loan also requires meeting the terms and conditions of New Markets Tax Credits and financing from Matrix Bank; WHEREAS, the City and the developer anticipate that the terms, conditions, and documents required for closing of the New Markets Tax Credits and Matrix Bank will not be satisfied before April 15, 2005; and WHEREAS, the developer has requested, in writing, an extension of the loan closing deadline to accommodate the other funding sources; and WHEREAS, the developer has demonstrated significant progress and expense toward meeting the terms and conditions of the Section 108 loan as evidenced in the developer's letter requesting the extension; and WHEREAS, the current status of the terms, conditions and documents for all of the project's financial sources is beyond the control of the developer; now therefore: BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA: The City Manager is hereby authorized to execute a Modification of the Conditional Approval Letter granting a 30 -day extension for closing of the Section 108 Loan to Yakima Hotel, LLC to construct a Hilton Garden Inn hotel. The City Manager is hereby designated as the official representative of the City to act in connection with that funding application and is authorized to take such additional actions as may be necessary and prudent to complete the application process, including the execution of all related documents. ADOPTED BY THE CITY COUNCIL this 5`h day of April, 2005. affiVte'ATTEST: Paul George, Mayor City Clerk DEVELOPMENT COMPANY 402 E. YAKIMA AVE. SUITE 1400 YAKIMA, WA 98901 PHONE (509) 248-4040 FAX (509) 457-8361 www.jemdevelopment.com Dick Zais City Manager City of Yakima 129 N. 2nd Street Yakima, WA 98901 March 28, 2005 Dear Mr. Zais, Mayor Paul George, and Yakima City Council Members: As you are aware, Morrier Hotel, LLC's Hilton Garden Inn project has an April 15th deadline with the City of Yakima to complete certain requirements needed for closure of the HUD loan funds. Morrier Hotel, LLC has made significant strides towards these goals, including a signed franchise agreement with Hilton Hotels, initial investment of over $389,273, and additional financial commitments of $163,890. In addition, a management team will be in place within the next several weeks. We are anxious to continue our progress with the hotel project and anticipate having the property appraisal, environmental review (phase 1) and survey of the property completed by April 15th Matrix Bank has ordered these items, as they needed to come from a pre —approved list from Matrix Bank. The appraisal has been ordered and is scheduled for April 8th; the phase 1 environmental review was ordered March 24; and the property survey is scheduled for early April. While considerable progress has been made, we are concerned that, due to circumstances beyond our control, the April 15th deadline could be in jeopardy due to the tight timeline involved. In order to provide additional safeguards for all parties concerned, we would like to formally request an extension of the April 15th deadline until May 15th. As I indicated above, we still feel that the April 15th deadline is attainable; but an extension would provide a measure of insurance. Morrier Hotel, LLC appreciates the support of the City of Yakima in this important project and looks forward to working on the completion of the hotel development. Best regards, e„........------(1-7 Joseph R. Morrier Morrier Hotel, LLC • ■ i ■ ■ ■ Proposed Hotel 401 East Yakima Avenue Yakima, Washington Monies Already Spent as of 3/28/05: Market Study -Chambers Group 23,380 Architecture-Gregov Architects 14,300 Architecture -Jensen -Fey Architects 2,282 Architecture -Abbott Heys & Associates 145,000 Schmid Design 113 Structural Radar Imaging 1,778 PLSA-Seismic Study 995 Standard Blue Print 676 MSI Construction 41,690 State, County & City Filing Fees 643 Legal 20,000 Accountant -Moss Adams 10,000 Loan Fee Deposit -Matrix Bank 23,000 Franchise Fee -Hilton Hotels 60,000 Closing Costs -NDC New Markets Investments 25,000 Misc.-plan copies, code books, etc. 467 Consultant -Hatch Purchasing Corp. 6,006 City of Yakima -Plan Review 13,943 Sub -Total 389,273 Additional commitments as of 3/28/05: Environmental Study 1,800 Appraisal 7,500 Structural Engineer 68,000 Architect -Abbott Heys 46,500 Asbestos removal 40,090 1!28/2005 9:48 AM Sub -Total Total 163,890 553,163 • • I:\dick\proposed hotl costs\Costslncurred ■ U;S/SU/ZUVO WU) zJ:G.a tAA LVD 440 0440 PIg41Vua1 LVV. 4VU11,+11 March 25, 2005 Mr. R. A. Zais, Jr., City Manager City of Yakima 129 North Second Street Yakima, WA 98901 TH NATIONAL 12 VELOPMEN'f COUNCIL Re: City of Yakima HUD Section 108 Loan to Morrier Hotel, LLC. Dear Mr. Zais, I write in response to you request for information to substantiate progress towards closing the Section 108 loan on the Hilton Garden Inn. It is my opinion that the loanwill be ready to close in late April of this year, but not by the April 15 date stipulated in the loan approval. Substantial progress has been made toward closing, but a number of required documents are still outstanding. Primary among these are the appraisal due on April 11 (The appraiser is hoping to complete it by April 8th .), final cost estimates due the first week of April and a building permit. While all parties are working diligently to complete the transaction, it is a complex closing and requires coordination of many parties. To date Mr. Morrier has spent in excess of $375,000 on the project and has obligated an additional $117,000. A listing of these expenses are as follows: Monies spent as of March 24, 2005 Market Feasibility Study — Chambers Group 23,380 Architecture - Gregov Architects 14,300 Architecture — Jensen -Fry Architects 2,282 Architecture — Abbott Heys & Associates 145,000 Schmid Design 113 Structural Radar Imaging 1,778 PLSA- Seismic Study 995 Stand Blue Print 676 MSI Construction 41,690 Scour. Urcr 1425 '4th Avrnur., Suitr. 66: 5rnlde, WA 98101 TEL (206) 4411-S244 FAX (206) 418.5246 VOIOWAVVV RLL 44;04 rrA 440 940 V6YV O661'La1 uay. vvuaat.,aa. State, County & City filing Fees 643 Legal 20,000 Account — Moss Adams 10,000 Loan Fee Deposit — Matrix Bank 23,000 Franchise fee — Hilton Hotels 60,000 Closing Costs — New Markets Tax Credits 25,000 Misc. — plan copies, code books, etc. 467 Consultants — Hatch Purchasing Corp. 6.006 Sub Total 375,330 Additional Commitments as of March 24, 2005 Environmental Study . L800 Appraisal 7,500 Structural Engineer 68,000 Asbestos removal 40,090 Sub Total Total 117,390 492,720 It is my opinion that all parties would benefit by an extension of the closing date by 30 days. The additional time should be sufficient to close the transaction with the attention that it requires. Please call if you need additional information or have any questions. Very truly y John Finke Senior Director cc, Bill Cook AT1ONAI. LOPMENT C.0I JNCIL ADDRESS: 230 S. 2"° STREET YAKI MA, WASHINGTON 98901 TELEPHONE: 509-834-6611 FACSIMILE, 509-834-6610 WEB SITE: www.cbblawdirm.com Cil i COMMUNITY DEVELOPMENT r+fl=, 8.E'437. 114, "11;xL.!1:0• 1P`w F0fii-f 47'1 i'I"'" t� 'l''aiiipi.,7,,,,,sE'ii',"4�`;:i,I:b"1F'.`�+".'kFt,' '. eS4',��',.tf ;i i. 4. 1ra"+.3Rf '�Q1�,q+'�'� d w rr,-r• �.. ,,., iA °+' At +Sp CarlsonBoyd &,4Sa�1ey LLQ 3,. ;s ,,,'+.K`.: --- *� tto:ne slat}Law- t•r ,I a'.:i"s, -'i5 r,.wx �"T,P ?i;n...{ dsk . x ,matt. .,.pi's ,moo' .,v, • March.25, 2005 Mr. R. A. Zais, Jr., City Manager City of Yakima 129 North Second Street Yakima, WA 98901 DONALD A. BOYD E Mail: dbovd@cbblawfirm.com • Re: City of Yakima HUD Section 108 Loan to Morrier Hotel, LLC. Dear Mr. Zais, I write to provide you with an update regarding the status of' the proposed City loan to the Morrier Hotel group. Over the past month, John Fink.e, Michael Morales and I have participated in two telephone conversations (one every other week) with a number of people who represent the other participants in this loan transaction. The following is a brief description of the transaction, and the people involved to date: The City will be loaning its money to an entity named "Yakima Investment Fund, LLC". This entity has not been formed as yet, but is in the process of being formed. The assets of this company will come from two sources (a) the City loan of $3,560,000, and (b) $1,333,500.00 in cash from NMTC Investor TransCapital. TransCapital's contribution arises because it will receive the benefit of the new markets tax credits being contributed to NDC New Markets Investments V, LP, as described below. This benefit is that TransCapital can offset tax credits in the amount of $1,908,465 against federal taxes it would otherwise owe in exchange for contributing the $1,333,500.00 to Yakima Investment Fund. To secure the City loan, Yakima Investment Fund will pledge its ownership interest in NDC New Markets Investments V, LP to the City. The City will also receive a personal guarantee by Joe Morrier. Mr. R. A. Zais, Jr. March 25, 2005 Page 2 of 2 Yakima Investment Fund, LLC will then transfer those assets to an entity named NDC New Markets Investments V, LP. This entity has been formed. Yakima Investment Fund will own 99.99% of this entity for its capital contribution of $4,893,500.00. The other .01% will be owned by HEDC New Markets, Inc. (which is .also already formed). HEDC New Markets, Inc. will contribute a portion of the "new markets tax credits" allocated to it by the United States Treasury Department to NDC New Markets Investments V in exchange for its .01% ownership interest. Those tax credits will then be assigned up stream to Yakima Investment, and then transferred to TransCapital in exchange for TransCapital's cash payment. NDC New Markets V will then lend to Morrier Hotel, LLC, $4,371,807 of its capital contribution from Yakima Investments (the City loan proceeds to Morrier Hotel, LLC, and the cash contributed by TransCapital). The remaining $521,963 will be retained by NDV New Markets V in order to pay loan costs and annual audit fees. NDC New Markets V will obtain collateral from Morrier Hotel, LLC in the form of a second mortgage on the hotel, security interests in the hotel equipment, inventory, etc., and assignments of the parking lease, management agreement and Hilton franchise agreement. The attorneys and representatives for TransCapital, for HEDC New Markets Investments V, for Morrier Hotel, and the City have been coordinating the documentation needed for this transaction over the past month. Most of the legal documents needed have been exchanged in draft form at this point. I anticipate that over the next two weeks, these documents will be in final form, and closing will only be awaiting the practical items required for loan closing (ie. appraisals, building permits, etc.). I hope this provides you the information you need regarding the status of this loan transaction. Please let me know if you have any questions regarding this, admittedly complex transaction. Very truly yours, Don Boyd cc. John Finke Bill Cook 7 X:\CPI`Y OF YAIUMA-20009\Moyer Hotel Project-2004018\Correspondence\Zais 032505 (Itr re status of closing).doc SI -EP GRAPE 113I1C PLAZA HOTEL GARDEN TERRACE z Et rn /rn TOP OF PROPOSED RPO' FL 54SS PROPOSED LEYEL5 EL 1563 _._ _P6OE05E_IEYEL3 _ EL eras TOPS; FASTING"1,34aF 117 ExiSTWG-L Ew 1R00P DONN TO rOt1L PARKING kt FELTON GARDEN INN EI4TRY VIEW TO LOBBY Elevation. SOUTH YAKIMA AVE 5calc V&.1-0' G e e c :STREET LEVEL I it.woro PMIS INGaSMm P'RKING LEVEL —ECaY— to 3 w et I— W f D 5; W ylstos by > z joe, W M d RCM 1 lnnc C srchllectun InWrIor 04alan Hilton Garden Inn woo. ne.In, er. Hilton.Garden Inn Yakima, Washington 401 ETWna Are. YtlWu, WA Issues wed nMabn No. Data 3/17/2005 0426 MA ext elevations A300 RETAILA(NIC) UNDER SEPARATE PERMIT Plan: LEVEL 1 (street level) ve.ry U (a) w OPMENT R DESIGN DE arcl,Iluctw, Iut00de EOSISf Hilton Garden Inn Hilton Garden Inn Yakima, Washington 4010.YaWu*va. 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DOM DOW DOUR I ttPEe ttPfD PO. 001 Btf Wtelf4.51L I' a fE 1 R6AY - •� _� 1 O EPINELRd1E WmBIEWdtF WLBIE-0OUEIE la 3t0 �u•1 Erma) dal .'.i� .: i - rc� 3bD ©FE B MMM iQ o MHII. . wan �rc 1 mPu pm,a I� i ROCE:ELO.v r I un/2fG 11 11 1z-10' 1z6' 12'-q' 0-C r.2 7-1P; 1r�- Yr -b' 46' 126' -0vr 3r-12 r.B 25-4232 ' 40i• 25 4 ' , -1 32 r P1325 LEVEL 3 08'. ]-0• ertN,Mure Interior ambo Hilton Garden inn Hilton Garden Inn Yakima, Washington 8655, WO Lu w 1- H w 0 0 0 w W MARCH 18. 2005 ° lams and 0...ns Bne 3/17/2005 0426 MA/KL6 .plan ... A104 0 OFFICE OF THE CITY MANAGER 129 North Second Street CITY HALL, Yakima, Washington 98901 Phone (509) 575-6040 December 7, 2004 Mr. Joseph R. Morrier, Sr. Morrier Hotel, LLC as Borrower dba Hilton Garden Inn, Yakima, Washington 402 East Yakima Avenue, Suite 1400 Yakima, WA 98901 RE: Conditional Approval Letter Dear Mr. Morrier: This letter supercedes the previous Conditional Approval Letter dated December 2, 2004, signed by Richard A. Zais, City Manager. The City of Yakima will proceed with a formal application to the United States Department of Housing and Urban Development (HUD) for a Section 108 loan guarantee in the amount of $3,560,000 subject to the conditions outlined in this letter. If approved by HUD, the proceeds of the Section 108 loan will be lent to an investment fund for investing in a New Markets Tax Credit fund ("Fund"). That fund will lend the Section 108 proceeds to the Borrower. Borrower: Monier Hotel, LLC ("Borrower") Guarantors: Joseph R. Morrier, Sr., Elizabeth L. Morrier; J.EM Properties, LLC Business Location: 401 East Yakima Avenue, Yakima, WA Purpose: The purpose of the Loan is to provide a portion of the interim and permanent financing for the proposed Hilton Garden Inn in Yakima, Washington. Estimated Sources/Uses of Funds: USES AMOUNT SOURCES AMOUNT Matrix Bancorp Land/Construction/Contingency $ 8,001,000 Conventional $ 3,000,000 F14E/Property Management Systems 1,020,000 HUD Section 108 3,560,000 New Markets _ Interest Reserves/Loan Fee 208,000 Tax Credit Equity 750,000 Closing Costs/Franchise Fees/WC 297,000 Owner Equity 2,216,000 TOTAL • $ 9,526,000 TOTAL $ 9,526,000 Yakima AO -America DIY 1994 JEM Properties, LLC and Morrier Hotel, LLC as Co -Borrowers dba Hilton Garden Inn Conditional Approval Letter Page 2 of 8 Equity: The. Borrower will contribute at least $2,216,000 of the total project costs in equity. Of that amount, approximately $1,500,000 is allocated toward the contribution of the existing land and building, $21'1,000 is allocated toward payment of the construction soft costs, $22,000 is allocated toward payment of the cost of the appraisal, Phase I Report, and survey, $20,000 is allocated toward payment of legal fees, $24,000 is allocated toward payment of estimated closing costs, $76,000 is allocated toward payment of the loan origination fee, $20,000 is allocated toward payment of the pre -opening expenses associated with the hotel, and $60,000 is allocated toward payment of the franchise fee. Proof of the equity injection and the source of these funds must be provided prior to the closing of the Section 108 Loan. Closing costs related to the Interim Loan, the Conventional Loan, and the. Section 108 Loan will be paid at or prior to closing. Any changes to this allocation of the equity injection will require approval by the City of Yakima. Proof of equity must be provided five days prior to 'the estimated closing date. Proof of equity must be supported by, but not limited to, cancelled checks (or a copy of the check and supporting bank statements reflecting the cancelled check), paid invoices, a cashier's check for funds not yet spent, or other means asdetermined only by Lender. Fees: A City of Yakima loan fee of $35,600 is due at closing. • The payment of this fee is eligible to be included in the Borrower's equity contribution. _ In addition to the loan fee, the Borrower shall be responsible for all legal fees, closing costs and trustee fees associated with preparing loan documents, closing the Section 108 Loan and administering the loan. In the event that the Section 108 Loan does not close, all costs and fees, to the extent they have been incurred, will be the responsibility of the Borrower. SECTION 108 LOAN Amount: The amount of the Loan will be $3,560,000. Term: The Section 108 Loan will be due on April 15, 2025. The Loan will be amortized over an eighteen (18) year term after expiration of the first seven (7) years of interest -only payments. Payment terms are interest -only for the first seven years, then principal and interest payments due monthly based upon an eighteen (18) year amortization period. The City will provide an estimated amortization schedule prior to loan closing. HUD will provide a final amortization schedule after closing. Interest Rate (Loan): The interest rate on the Loan will fluctuate based on the City of Yakima's cost of funds under the Section 108 Loan Program. The cost of funds to the City of Yakima is based on a 90 -day LIBOR, plus 20 basis points, adjusted monthly. The Borrower may fix the interest rate on the Loan once. a year. The Borrower will be responsible for the costs of fixing the rate. HUD determines the fee for each project by dividing the total cost of the Public Offering by the amount of financing per project. TEM Properties, LLC and Morrier Hotel, LLC as Co -Borrowers dba Hilton Garden Inn Conditional Approval Letter Page 3 of 8 Payment: The first payment will be due on the fifteenth day of the month the Loan is closed and on the same day each month thereafter: until paid in full Prepayment Penalty: Once the Loan is converted to a fixed rate it is subject to a ten (10) year lockout in- which no prepayment is allowed, unless HUD. approves a defeasance. Late Fee: If a payment on the Loan is more than 10 days late, City may charge Borrower a late fee of up to 5% of the unpaid portion of the regularly scheduled payment. Amount: The amount of the HUD Section 108 Loan will be $3,560,000. LOAN CONDITIONS: The Loans are subject to and contingent upon the following: • The Fund being able to secure a Second Deed of Trust (or its equivalent) in the real property, including furniture and fixtures, located at 401 East Yakima Avenue, Yakima, WA, subject only to the First Deed of Trust in favor of Matrix Bancorp inthe amount of $3,000,000. • Receipt, review, and approval, by the Fund and City of Yakima at their sole discretion, of the real estate appraisal ordered by Matrix Bancorp, reflecting a loan (Section 108 and Matrix Bancorp) to value of not more than seventy (70%) percent by a Lender approved appraiser for the real property and 14-' &E. • Receipt, review and approval of an ALTA title policy (or its equivalent) in fotni and substance satisfactory to the Fund and the City in their sole discretion, insuring the Fund as to its second priority lien on the subject property at 401 East Yakima Avenue, Yakima, WA, subject only to Matrix Bancorp's first lien position. • The Fund being able to secure a UCC -1 and Security Agreement perfecting a second lien position in all fixtures, equipment, inventory, accounts, general intangibles, chattel paper, documents, and instruments now owned and hereafter acquired from Fund proceeds,and all replacements thereof, for the proposed Hilton Garden Inn. The City will agree to subordinate its security interest in inventory and accounts, including accounts receivable, to a 3rd party lender providing operating funds up to $1,000,000.00. • Upon execution of this Conditional Approval Letter and by signing below, Borrower acknowledges and agrees that this JEM Properties, LLC and Morrier Hotel, LLC as Co -Borrowers dba Hilton Garden Inn Conditional Approval Letter Page 4 of 8 Conditional Approval Letter shall also constitute an authenticated record pursuant to the Uniform Commercial Code authorizing Lender to file a UCC -1 financing statement covering the following collateral: furniture, fixtures, equipment, machinery, inventory, accounts, general intangibles, chattel paper, documents, materials, work in progress, and instruments now owned and hereafter acquired. Lender further agrees to terminate such financing statement in the event the Loan is not closed and funded. o Review and approval by the Fund and City of Yakima of a satisfactory Phase I Environmental Site Assessment for the property located at 401 East Yakima Avenue, Yakima, WA. • Personal guaranty of Joseph R. Morrier, Sr., supplemented with an authenticated personal financial statement dated within 120 days before loan closing. ® Personal guaranty of Elizabeth L. Morrier, supplemented with an authenticated personal financial statement dated within 120 days before loan closing. • o Commercial guaranty by JEM Properties, LLC, supplemented with an authenticated financial statement dated within 120 days before loan closing. • Evidence that Morrier Hotel, LLC has unencumbered site control of the subject property at 401 East Yakima Avenue. • Assignment of the parking rights for the proposed Hilton Garden Inn held by Morrier Hotel, LLC. The number of parking spaces and the parking rights must comply with the requirements set forth by the City of Yakima. • . Assignment of the management contract between Morrier Hotel, LLC and Hilton Hotels (or its designated affiliated company) for the management of the proposed Hilton Garden Inn. If the proposed hotel is not managed by Hilton Hotels, the management company must have extensive experience in hotel management and be acceptable to the Fund, the City of Yakima and Matrix Bancorp. The management agreement must have a termination provision allowing either Lender to terminate the contract if the loan were in default. JEM Properties, LLC and Morrier Hotel, LLC as Co -Borrowers dba Hilton Garden Inn Conditional Approval Letter Page 5 of 8 Insurance Financials: • Assignment of any and all access easements to the subject property. o Review and Approval by the Fund and the City of Yakima of the final construction contract. The contract shall require the contractor to obtained a payment and performance bond in the amount of the construction contract. 0 The Borrower obtaining and providing proof of Workers' Compensation Insurance in an amount meeting state law requirements and with an insurance company satisfactory to HUD Loan Lender. The Fund receiving a copy, satisfactory in its own discretion, of the fire and extended coverage insurance on the business real property in the amount of full replacement cost with the Fund named as second mortgagee for the property at 401 East Yakima Avenue, Yakima, WA. • The Borrower obtaining and providing proof of Business/Personal property insurance coverage in the amount of full replacement cost, or for the maximum insurable value if full replacement cost cannot be obtained, for the personal property located, owned, or used by Morrier Hotel, LLC dba Hilton Garden Inn. o The Borrower obtaining and providing proof of Business Interruption and Extra Expense coverage. o The Borrower obtaining Flood insurance covering the Loan collateral if required by the Fund. Receipt, review and approval of financial statements and all supporting schedules, as requested, are to be within 120 days of closing the HUD Loan. Other Conditions: This loan is subject to evidence of final commitment and acceptance by the Borrower and approval by the City of Yakima of a conventional loan from Matrix Bancorp to the borrower in the amount of $3,000,000. This loan is subject to any and all other JEM Properties, LLC and Morrier Hotel, LLC as Co -Borrowers dba Hilton Garden Inn Conditional Approval Letter Page6of8 conditions required by the Fund and City of Yakima and their counsel to document, secure, and close the proposed financing request. All conditions are required to be satisfied prior to funding of the Section 108 Loan. GENERAL NOTES: Conditional Approval: Please be aware that the final telins and conditions of the proposed financing are subject to approval by the City of Yakima and the US Department of HUD. Also, all legal and financial documents deemed necessary by the City in order to close the Loan must be provided and executed to the satisfaction of any or all of the parties listed above no later than April 15, 2005. . No verbal statements to Borrower concerning this application by any employee or agent of Lender shall have binding effect. The Borrower provides the information used in granting this Conditional Approval in majority. If such information is found to be.a misrepresentation, intentional or unintentional, this Conditional Approval shall become null and void. Any legal description, encumbrances and ownership are subject to verification and should not be relied upon as accurate in this Conditional Approval. Material Adverse Change: If at any time there is a material adverse change in the financial or any other condition, or the business prospects, of Borrower or any Guarantor, the City will have no obligation to advance any funds whatsoever. This Conditional Approval is valid until December 15, 2004. If this acknowledged letter, including notarized signatures of the guarantors, is not received on or before December 15, 2004, the City of Yakima will have no further obligation or responsibility in connection with the Loan, and the Conditional Approval may be rescinded by action of the City Council. Furtheiurore, if the Loan does not close by April 15, 2005, this Conditional Approval Letter will be considered null and void, unless extended in writing by the City of Yakima. To indicate your understanding and agreement with the terms and conditions contained in this Conditional Approval, please return an executed and notarized copy of this Conditional Approval to the City of Yakima. ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW. THIS COMMITMENT SUPERCEDES AND VOIDS ANY PRIOR LOAN APPROVALS, COMMITMENTS OR PROPOSALS. JEM Properties, LLC and Morrier Hotel, LLC as Co -Borrowers dba Hilton Garden Inn Conditional Approval Letter Page 7 of 8 Sincerely, \„\ Richard A. Zais, Jr. City Manager • STA'I'L OF WASHINGTON ) ) ss. County of Yakima ) On this /�f'�- day of - , 2004, before me personally appeared R. A. Zais, Jr., to me known to be the City Manager of the City of Yakima, a Washington municipal corporation that executed the within and foregoing instrument and acknowledged the said instrument to be the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned,- and on oath stated that he was authorized to execute said instrument and that the seal affixed thereto is the corporate seal of said corporation. In Witness Whereof I have hereunto set my hand and affixed my official seal the day and year first above written. Printed Name: JA -re-, S. /2a ), e- 'fr Notary Public in and for the State of Washington, residing at V t �w My commission expires 5— () —OS JEM Properties, LLC and Morrier Hotel, LLC as Co -Borrowers dba Hilton Garden Inn Conditional Approval Letter Page8of8 ACKNOWLEDGED AND AGREED BY: JEM Properties, LLC 1V anag�ng Member icy p Managing Member Ma fa 'n Member � g Moprier otel, LLC Date 1 ?—) b --2c7 / Date 12-J02c L/ Date_ Managing Me ber J eph R. Morrier, Sr / - /G Date /2 / L �� Date Elizabeth L. Morrier Date STATE OF WASHINGTON ) ) ss. COUNTY OF YAKIMA ) I certify that I know or have satisfactory evidence that Joseph R. Morrier,Jr., Michael D. Morrier and Elizabeth M. McGree each signed this instrument, on oath stated that they were authorized to execute the instrument, and acknowledged; it as the sole Members of JEM Properties, LLC to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Given under my hand and official seal this io day of 4 , 2004. STATE OF WASHINGTON ) ) s . COUNTY OF YAKIMA ) Notary Public in and for the State of Washington, residing at /rdpal , dYA- My appointment expires: ,geb a5,aaa� I certify that I know or have satisfactory evidence that Joseph R. Morrier signed this instrument, on oath stated that he was authorized to execute the instrument, and acknowledged it as the Manager of Morrier Hotels, LLC to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Given under my hand and official seal this /0 day of 42-v , 2004. (04 Notary Public inTd for the State of Washington, residing at 114/47f),1(4 My appointment expires: ,Ps o/ BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. For Meeting Of: April 5, 2005 ITEM TITLE: Consideration of a request from Joseph and Elizabeth Monier, dba Yakima Hotel, LLC, for a 30 -day extension to meet the terms and conditions of, and execute closing documents for a Section 108 loan to construct a Hilton Garden Inn Hotel. SUBMITTED BY: Michael Morales, Economic & Community Affairs Specialist CONTACT: Michael Morales, 575-3533 SUMMARY EXPLANATION: On November 16, 2004 the City Council approved a $3,560,000. Section 108 loan for Joseph and Elizabeth Morrier, dba Yakima Hotel, LLC, to partially finance construction of a Hilton Garden Inn Hotel at the site of the former Mervyn's department store in downtown Yakima. A . Conditional Approval Letter was accepted and signed by the Morrier's on December 14, 2004. That letter included a condition that all conditions must be met and the loan closed by April 15, 2005. Due to circumstances beyond his control, Mr. Morrier has requested a 30 day extension to this deadline. His request and explanation, along with memos from our underwriting consultant and legal counsel, are attached. Resolution _ _ Ordinance _ Contract Other: Approval for Submittal: CityNfana er 9 STAFF RECOMMENDATION: Staff recommends granting the extension BOARD RECOMMENDATION: Council Economic Development Committee recommends granting the extension Resolution adopted. RESOLUTION NO. R-2005-52 COUNCIL ACTION: 1