HomeMy WebLinkAboutR-2005-024 2005 Commercial Revitalization Deduction Allocation / Morrier Hotel, LLC (re: Hilton Garden Inn)RESOLUTION NO. R-2005- 24
A RESOLUTION providing conditional local approval of 2005 allocation of the federal
Renewal Community Commercial Revitalization Deduction in the amount
of $3,253,700 to Monier Hotel, LLC for the Hilton Garden Inn project.
WHEREAS, economic development is a priority of the City of Yakima, and the City
intends to approach economic development on a comprehensive basis involving public, private
and community-based efforts to achieve new investment and redevelopment in the City; and
WHEREAS, the City has been formally designated a Renewal Community under the
Empowerment Zones and Renewal Communities Initiative by the federal government; and
WHEREAS, the Renewal Communities Program includes, in part an opportunity for
Renewal Communities to participate in a Commercial Revitalization Tax Deductions plan
whereby certain local development projects (including certain rehabilitation of existing
development) may qualify for accelerated partial deduction of development costs by way of
enhanced federal income tax deductibility; and
WHEREAS, the City of Yakima retains responsibility for developing and administering
locally a Qualified Allocation Plan for evaluating eligible development activities within the
community; and
WHEREAS, the City of Yakima has an allocation of $12 million in Commercial
Revitalization Tax Deductions for the year 2005 that must be allocated by December 31, 2005;
and
WHEREAS, an application for the 2005 Commercial Revitalization Deduction and a
request for special consideration was made by Morrier Hotel, LLC for the Hilton Garden Inn
project; and
WHEREAS, the project application was determined to be eligible to receive the
Commercial Revitalization Deduction; and
WHEREAS, Monier Hotel, LLC (dba MW Hotel, LLC) received a 2003 allocation of
Commercial Revitalization Deduction in the amount of $3,247,300, and the 2005 request is
needed to complete the balance of CRD that the project requires; and
WHEREAS, the City Council appointed Commercial Revitalization Deduction
Allocations Committee reviewed and recommends conditional local approval of the project in
the amount of $3,253,700; and
WHEREAS, the City Council has determined that the local approval of 2005 CRD for
Monier Hotel, LLC be made contingent upon Morrier Hotel, LLC fulfilling the conditions of its
federal Section 108 loan approved by the City of Yakima on November 16, 2004, and presented
and accepted by Morrier Hotel, LLC in the Conditional Approval letter dated December 7, 2004;
and
WHEREAS, the allocation of CRD to the project will not be formalized with the State of
Washington until said terms and conditions have been met, now, therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA:
a. An allocation of 2004 federal Renewal Community Commercial Revitalization
Deduction in the amount of $3,253,700, to Morrier Hotel, LLC for its Hilton Garden Inn project
is hereby approved but expressly conditioned and contingent upon Morrier Hotel, LLC's
compliance with all terms and conditions of its federal Section 108 loan that was approved by
City Council on November 16, 2004.
b. The allocation of the Renewal Community Commercial Revitalization Deduction
in the amount of $3,253,700, to Morrier Hotel, LLC for its Hilton Garden Inn project will not be
formalized with the State of Washington until Morrier Hotel, LLC complies with all terms and
conditions of its federal Section 108 loan that was approved by City Council on November 16,
2004.
ADOPTED BY THE CITY COUNCIL this lst day of February, 2005
Paul P. George, Mayor
ATTEST:
fl -v✓ SCJ
City Clerk
CITY OF YAKIMA
RENEWAL COMMUNITY RECEIVE'
COMMUNITY REVITALIZATION DEDUCTION
PROGRAM APPLICATION DEC 2 0 2004
FY 2004
CITY OF YAKIMA
COMMUNITY DEVEL0p F f'
Please answer the following questions and attach the requested information (Note: the
entire CRD application is considered to be a public document. Financial and
commercial information provided by a private business in the application will be treated
as confidential by the City of Yakima to the extent permitted by 42.17.310(o) RCW
Submit to Michael A. Morales
Dept. of Community & Economic Development
129 North 2nd Street, Yakima, WA 98901
Applicant: Morrier Hotel, LLC
Federal Tax Number:
WA State UBI Number
Contact: Joseph R. Morrier
Title: Manager
Telephone: 509.248.4040 ext 203
Fax: 509.457.8361
Email: Joe@jemdev.com
Address: 402 E Yakima Ave Suite 1400 Yakima WA 98901
Alternative Contact Elizabeth M. McGree
Type of Project (check all that apply)
New Construction
Rehabilitation of existing building
Other (please specify)
x
Total Commercial Revitalization Deduction allocation requested: $ 3,253,700
This request for a CRD commitment is for a building (new construction or
substantial rehabilitation) scheduled to be placed into service in year. 2005
Project Location
Provide Street address or legal description of the facility. Please be as precise as
possible. Projects must be located within the boundaries of the Renewal Community
without exception. City of Yakima staff can verify address locations for applicants by
using the HUD RC Address Locator Service.
401 East Yakima Ave, formerly the Mervyn's Department Store Building.
Project Description.
Describe the proposed private development or expansion project that will be supported
by the Community Revitalization Deduction.
The proposed hotel .will be constructed on the site of the current vacant Mervyn's
Department store. The existing structure will be extensively remodeled, with an
additional three floors added. The resulting hotel will be five stories, with 104 guest
rooms on the second, third, fourth and fifth floors. The structure will contain
approximately 94,686 sq. feet. The hotel will be a. franchise of the Hilton Garden Inns.
The hotel accommodations will represent the upper end of the mid -priced hotel category
which is in high demand among cost-conscious business and leisure travelers. The five
story Hilton will include: an indoor swimming pool, an attractive exercise facility, a
pavilion effect reception area; a Pavilion Pantry®; a breakfast cafe; a comfortable
lounge area; two meeting rooms with meeting space; a complimentary business center.
It will also have an adjoining lounge, hotel offices, restaurants, kitchens and bars,
approximately 1,650 square feet of meeting rooms and approximately 6.000-8000
square feet of retail space. Proposed tenants for the retail shops include a jewelry
store, a clothing retailer, a coffee shop, a gift shop and/or a wine and chocolate shop.
One restaurant and bar will be part of the hotel. operation. The lower level will house the
hotel's mechanical, maintenance, laundry, storage and parking
The hotel's feel will appeal greatly to business travelers as well as leisure travelers.
Convention attendees will find the hotel in close proximity of the key downtown
attractions — the Yakima Valley Convention Center, the Capitol Theatre, and historic
Front Street.
Project Need:
Explain why the private development requires the community revitalization deductions
requested in this application.
The total project is estimated to be at 9,526,000; the project has all of its financing
in place and is nearing completion of architectural and engineering documents
for construction bids. Prior to bidding the project in March of 2005, and closing
on our loans in April 2005, it is necessary to secure our commitment of CRD, so
that our private investment may be completed and justified
Projected Employment Impacts
List the number of proiected jobs, by job type, to be retained and/or created by the firm
as a direct
result of the public infrastructure project supporting the private development.
Jobs must be expressed in Full Time Equivalents (FTEs).
Wage data should exclude fringe benefits.
*Management positions should be indicated as an annual salary.
Job
Description
Current # Of
Jobs
Retained** (In
FTEs)
# Of Jobs
Created Year
1 (In FTEs)
# Of Jobs
Created by
Year 3 (In
FTEs)
. Current or initial
Hourly Wages (or
salary)
Mgmt./Admin*
3
5
TBD
Technical/Prof
3
5
TBD
Office/Clerical
1
TBD
Production
Sales
1
TBD
Skilled Crafts
•
Others
40
20
TBD
a) Number of Jobs **Retained
b) Projected annual gross payroll for all job classifications $ TBD
c) How many of these positions are for seasonal work? (In FTE)
0
d) What kind of fringe benefits does the company offer to regular full time employees?
TDB. Possibly medical, dental, vacation and sick leave
**Retained jobs are defined as jobs that would otherwise be lost to the City.
Will this project displace existing jobs in any other part of the county? Yes No x .
If "yes," please describe the circumstances.
How were job projections developed? Explain why the projections are realistic.
Using basic industry standards, and from market/feasibility study.
Will the private sector project offer expanded employment opportunities to
disadvantaged or unemployed workers? How will the firm work to hire people
from the Renewal Community area?
The hotel is centrally located in the Renewal Community providing accessible job
Opportunities for RC residents.
Project Timelines and Permits
Indicate the construction schedule for the proposed private sector project.
" (Month/Year)
Private Facility Construction Begins April 2005
Private Facility Construction Completed Winter 2005
Private Facility Operational Winter 2005
List all permits required for the project and give their current status (applied for,
application being prepared, permit issued, etc.)
PERMIT/ ANTICIPATED
ENVIRONMENTAL COMPLETION
REVIEW ISSUER STATUS DATE
Environmental Review City of Yakima 12/2004
Building Permit City of Yakima 03/2005
Private Sector Authorization and Financing
What, if any, private authorizations remain prior to proceeding with the proposed private
development project?
Project Costs
Acquisition Costs $
Purchase of land (if separate) $ 1,500,000
New Construction $ 4,501,000
Rehabilitation $ 2,000,000
Infrastructure $
New Machinery & Equipment $ 1,020,000
Other: loan fees and closing costs 505,000
TOTAL PRIVATE INVESTMENT $ 9,526,000
Explain how the private sector is financing their capital investment in this project. When
Will private sector financing be in place? It is in place 2004.
Please list financial references that can verify financing sources and capacity for this
project or provide a letter from finance officer that verifies funding is in place for this
project. Dave Painter, Matrix Capital Bank 503.684.1249
John Finke, National Development Council 206.448.5244
Certification by Applicant
Applicant hereby certifies that all information contained above is true to his/her -
knowledge and belief and is submitted for the purpose of accessing the City of
Yakima and State of Washington Renewal Community Commercial Revitalization
Deduction program.
Applicant Signature :
Print Name:
L
141.
Date: /2--- -- 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. Monier:
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: Morrier Hotel, LLC (`Borrower")
Guarantors: Joseph R. Morrier, Sr., Elizabeth L. Monier; JEM 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
FFE/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
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, $244,000 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 as determined 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.
JEM 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 in the amount
of $3,000,000.
a 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 r'r&E.
• Receipt, review and approval of an ALTA title policy (or its
equivalent) in form 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.
• 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, Yakimai WA.
r
• 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.
• Commercial guaranty by TEM Properties, LLC, supplemented
with an authenticated financial statement dated within 120 days
before loan closing.
• Evidence that Mother 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 Monier 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 Monier 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.
• 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.
• 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 Monier Hotel, LLC dba Hilton Garden Inn.
• The Borrower obtaining and providing proof of Business
Interruption and Extra Expense coverage.
• 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 terms 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.
Furthermore, 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 COMVINIITMENT
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 1'b OF WASHINGTON )
) ss.
County of Yakima )
On this 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: f& L e -
Notary Public in and for the State of Washington,
residing at Yd -4< -
My commission expires S— r)-- —v S
JEM Properties, LLC and Monier Hotel, LLC as Co -Borrowers dba Hilton Garden Inn
Conditional Approval Letter
Page 8 of 8
ACKNOWL9GED AND AGREED BY:
JEM Properties, LLC
anaging Member 14
Managing Member
i ' /• /toi'(Xx-
\1 to" ,D
Date
17— )b-20,-.)-1
Date
M. aging Member
Mo rier otel, LLC
naging Me r ber
Guara .to s
J eph R. Monier, S
Date
Date
/2 % c
Date
Y
13 - o Cf
Elizabeth L. Monier 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 /v day of 41-0-A , 2004.
Notary Public in and for the State of
Washington, residing at %r,Put, i)4 -
My appointment expires: gels 25,avve
STATE OF WASHINGTON )
) ss.
COUNTY OF YAKIMA )
I certify that I know or have satisfactory evidence that Joseph R. Morrier
signed this instrument, on oath stated thathe 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.
�40,,O S 10N
Notary Public in Ind for the State of
Washington, residing at /i/,v..i, h'R
My appointment expires:,A.6 aSaoo/
STATE OF WASHINGTON )
) ss.
COUNTY OF Y`-AKIMA )
I certify that I know or have satisfactory evidence that Elizabetht L. Morrier
signed this instrument, and acknowledged it to be her free and voluntary` -act for the
uses and purposes mentioned in the instrument.
Given under my hand and official seal this /3 d of 41 ,.....,,2004.
•
i
� - d
ota y/ u c in and for the State of.
Washington, residing at
My appointment expires: 3 -%°Y- of
STATE OF WASHINGTON )
COUNTY OF YAKIMA )
ss.
I certify that I know or have satisfactory evidence that Joseph R. Morrier
signed this instrument, and acknowledged it to be his free and voluntary act for the
uses and purposes mentioned in the instrument.
Given under my hand and official seal this /0 day of 414-) 2004.
Notary Public in anfor the State of
Washington, residing at /i n'A
My appointment expires: 3s, ga'
Mr. Richard Zais
City Manager
City of Yakima
129 N. 2nd Street
Yakima, WA 98901
U.S. Department of Housing
Washington State Office
Seattle Federal Office Budding
Office of
909 First Avenue, Suite 300
Seattle, WA 98104-1000
www.hud.gov/washington.html
JAN 1 4 2005
JAN 2 0 2005
OFFICE OF CITY MAT
Dear Mr. Zais:
SUBJECT: Authority to Use Grant Funds for Yakima Hotel LLC/Hilton Garden Inn
We have received the Request for Release of Funds and Certification submitted
lwith your
Grants F
nature on 12/29/04. The activity listed on the enclosed Authority to Use
ansignature
(HUD Form 7015.16) has received satisfactory environmental clearance.
Enclosed is an Authority to Use Grant Funds for activities requiring a release of
li funds by HUD under the Environmental Review Procedures at 24 CFR Part 58. You are
hereby authorized to incur costs for the activity listed above and on the enclosed form as
of 01/14/05, provided there are no other conditions that must be removed or cleared.
If you have any questions please call Donna Batch at (206) 220-5374.
Enclosure
erely,
1
Donald A. ' hillips
Deputy Director
Office of Community Planning
and Development
FOR COUNCIL INFO ONLY
DATE I- 5-1,5
Authority to Use
Grant Funds
U.S. Department of Housing and Urban Development
Office of
To: (name & address of Grant Recipient & name & title of Chief Executive
Officer)
Richard Zais, City Manager
City of Yakima
129 N. 2nd Street
Yakima, WA 98901
Copy To: (name & address of SubRecipient or Secondary Contact)
Marvin Miller, Operations Supervisor
Department of Community and Economic Development
City of Yakima
112 South Eighth Street
Yakima, WA 98901
We received your Request for Release of Funds and Certification, form
HUD -7015.15 on
Your Request was for HUD/State Identification Number
12/29/04
B -04 -MC -53-0008
All objections, if received, have been considered. And the minimum waiting period has transpired.
You are hereby authorized to use funds provided to you under the above HUD/State Identification Number.
File this form for proper record keeping, audit, and inspection purposes.
Proiect/Activit,:
Yakima Hotel LLC/Hilton Garden Inn
Location:
401 E. Yakima Avenue, Yakima, WA
Typed Name of Authorizing
Officer:
Donald A. Phillips, Deputy
Director,
Office of Community
Planning and Development
Action Number: 148
ref. Handbook 6513.0
Effective Release Date:
form HUD -7015.16 (2/94)
neik
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. 6
For Meeting Of: February 1, 2004
ITEM TITLE: Consideration of a Resolution providing conditional local approval
of a 2005 Commercial Revitalization Deduction allocation to Morrier
Hotel, LLC in the amount of $3,253,700.
SUBMITTED BY:
Michael Morales, Economic & Community Affairs Specialise
CONTACT: Michael Morales, 575-3533
SUMMARY EXPLANATION:
In December 2004, Mr. Joe Morrier of Morrier Hotel, LLC informed the city that he would
not proceed with construction of the Hilton Garden Inn at 401 East Yakima Avenue
without a commitment of $3,253,700 in 2005 Commercial Revitalization Deduction
(CRD),
Although he has consistently informed staff that he would be applying for an additional
CRD commitment, only in December were we told that Council approval of the
additional $3.25 million is a condition of the project going forward. To date, Mr. Morrier
received a forward CRD allocation of $3,247.300 in the 2003 cycle, and his project must
be in service by December 31, 2005 to preserve that allocation. If the project is placed
in service by December 31, 2005, it will be ineligible to receive an allocation from any
subsequent year.
At the time of his request, we informed Mr. Morrier that there is a process in place for
awarding CRD's, including recommendation from a council appointed CRD Allocations
Committee. That committee met on January 21, 2005 to review Mr. Morrier's completed
application form and unanimously voted to provide a conditional allocation to the
project. A draft of the committee's minutes is attached.
CONTINUED ON NEXT PAGE
Resolution X Ordinance
Contract Other:
Approval for Submittal:
City Manager
STAFF RECOMMENDATION: Staff recommends approval of the Resolution.
BOARD RECOMMENDATION: CRD Allocations Committee recommends approval.
COUNCIL ACTION: Resolution adopted. RESOLUTION NO. R-2005-24
1
Both the CRD committee and staff recommend that the CRD commitment to Morrier
Hotel be conditioned on meeting the deadlines and requirements of Morrier's Section
108 loan from the city, which are set forth in the Conditional Approval letter dated
December 7, 2004, (i.e., if the loan is not closed by April 15, 2005, the entire package of
city assistance, including the 2005 CRD, would be withdrawn.). A copy of the letter is
also attached.
With Council approval today, Mr. Morrier will be provided a conditional local
commitment for 2005 CRD. A formal request for a CRD certificate from the State of
Washington will be made only if the terms and conditions of his Section 108 loan and
other financing have been met by the April 15 deadline. If Mr. Morrier fails to fulfill the
conditions of his Section 108 loan and CRD allocation by April 15, 2005, the 2005 CRD
allocation will be made immediately available for other projects as part of the 2005
application cycle, which the CRD committee voted to begin on April 16, 2005.
2
DEVELOPMENT
COMPANY
402 E. YAKIMA AVE.
SUITE 1400
YAKIMA, WA 98901
December 15, 2004
Honorable Mayor and City of Yakima Council Members
CRD Committee
129 North 2nd Street
Yakima, W A 98901
Re: 2003 and 2005 CRD Allocation
Dear Honorable Mayor, Council Members and CRD Committee:
PHONE (509) 248-4040 Thank you for your support and the opportunity to soon begin the venture of
FAX (509) 457-8361 constructing a Hilton Garden Inn in downtown Yakima.
GITY OF YAKIMA
(QMMLINITV DEVELOPMENT
I felt the need for this additional letter to stress the importance of the requested
Section 108 loan funds-- for a project of this magnitude, it is paramount that we
www.jemdevelopment.com receive both the 2003 and the 2005 CRD allocations as requested. The project just
cannot be realized without that funding.
It remains critical that the City and private industry work together to invest in the
renewal of our downtown—to create and retain j obs of area residents and provide
a more stable environment to help create and sustain local business.
Sincerely,
J �
Joseph R. Morrier
Morrier Hotel, LLC
Manager
DEVELOPMENT
COMPANY
402 E.YAKIMA AVE.
SUITE 1400
YAKIMA, WA 98901
December 15, 2004
Honorable Mayor and City of Yakima Council Members
CRD Committee
129 North 2nd Street
Yakima, W A 98901
RECEIVED
DEC 2 0 2004
CITY OF YAKIMA •-
COMMUN T Y DEVELOPMENT'
Re: 2005 CRD Allocation
Dear Honorable Mayor, Council Members and CRD Committee:
PHONE (509) 248-4040 Please accept this letter of formality requesting $3.25 million in CRD Tax Credits
FAX (509) 457-8361 towards the downtown Hilton Garden Inn project.
The project has all of its financing in place and is nearing completion of
architectural and engineering documents for construction bids. Prior to bidding the
www.jemdevelopment.com project in March 2005, and closing on our loans in April 2005, it is necessary to
secure our commitment CRD, so that our private investment may be completed
and justified.
The necessity of an earlier commitment for the tax credits is due to its importance
in the overall success of the project. We thank you again for working alongside
private industry to invest in the renewal of our downtown.
Sincerely,
HcaL /2 /7o2A-.,-----
Joseph R. Morrier
Morrier Hotel, LLC
Manager
City of Yakima Renewal Community
Commercial Revitalization Deduction
Allocations Committee
Minutes for the meeting of January 21, 2005 — DRAFT
8:30 a.m. in the Planning Conference Room of City Hall
Members Present:
Mark Mochel
LeRoy Thompson
Julie Smith
Ron Bonlender
Mary Harris
Joe Mann
Staff: Michael Morales
No members absent
The meeting was called to order at 8:30 a.m.
I. Review and consideration of 2005 CRD allocation for Morrier Hotel, LLC.
The committee was presented with a completed application for 2005 CRD allocation submitted
by Joseph Morrier of Morrier Hotel, LLC. Staff also submitted a score sheet and summary of
how the application met the evaluation criteria to the committee, and the members were asked to
review the proposal. An electronic version of the documents had been transmitted to the
members via e-mail and fax one day earlier. A discussion ensued on the proposal.
Mark Mochel expressed concern that the jobs section of the application was not complete
because wages and benefits were not adequately described by the applicant. He said this would
affect his score in the jobs category, which carries the most weight. At this point in the process,
with market studies and pro forma completed on the project, the applicant should know what the
labor costs of the project will be. He also noted that this will be an important issue in a
competitive cycle, and that applicants should be advised about the importance of completing
each section completely. Other members of the committee agreed with Mr. Mochel's
observation.
Ron Bonlender expressed concern that Mr. Morrier would be able to hold this allocation and
prevent any one else from using it, even if the hotel project did not develop. He did not want to
see the city waste an allocation in this more competitive environment. Mary Harris and Julie
Smith also were concerned about this possibility. Michael Morales advised the committee that
the staff recommendation for this issue is to tie the CRD allocation to the conditions of Mr.
Morrier's Section 108 loan from the city. That loan has a closing deadline of April 15, 2005. If
Mr. Morrier fails to close on the loan by that date, the city's loan offer would be withdrawn.
Morales recommended that the CRD allocation be given the same deadline and linked to the
terms and conditions of the loan. Further, the conditional approval would only be made at the
local level, and not submitted to the state for an official certificate until the conditions have been
met. This would prevent Morrier from holding the allocation for two years without building a
project. It would also allow the city to free up the allocation for competition immediately if he
fails to perform.
The CRD committee unanimously agreed that the city's CRD allocation to Morrier follow the
conditions of the Section 108 loan, and recommended that the project be forwarded to the City
Council for conditional approval.
II. Review of forms and scoring criteria for 2005 CRD application cycle
The committee continued its discussion of the scoring and evaluation criteria from the December
21, 2004 meeting. Morales presented the program guidelines that were revised to reflect the
changes recommended by the committee.
The most significant changes in the scoring criteria were the elimination of the "Need for
Deduction" category, and adding those points to the "Elimination of Blight/Historic Preservation
or Reuse" category. The description of the "Community Impact" category was also broadened to
provide more flexibility for the reviewer to provide these points to projects that displayed
exceptional value. The scoring will remain on a 50 point scale, with "Job Creation/Retention"
and "Readiness to Proceed" carrying the most weight.
Morales also recommended that the guidelines clearly state that applications for projects being
placed in service this year will be given priority in the review process.
THE COMMITTEE UNANIMOUSLY RECOMMENDED APPROVAL OF THE
REVISED SCORING CRITERIA FOR CRD.
Morales presented a revised application and guidelines for the 2005 CRD application cycle. The
application was restructured to follow more directly the evaluation and scoring criteria adopted
by the committee, and make it easier for an applicant to state their case. Morales also informed
the committee that applications submitted in 2004 that did
THE COMMITTEE UNANIMOUSLY RECOMMENDED APPROVAL THE REVISED
APPLICATION FOR 2005 CRD.
III. OTHER BUSINESS
2005 Application Cycle: The committee discussed the timing of the 2005 application cycle.
Morales recommended a spring or early summer application cycle because it allows staff to
better determine which projects are most like to be placed in service this year by verifying and
tracking building permits. If a sizable project is to be completed this year, it should have at least
have a building permit in process by the spring. The timing would also allow the city to place
Morrier's allocation up for competition in the same cycle if he fails to meet his allocation
conditions. The committee agreed with these recommendations, and set a meeting of June 10,
2005 to review and score 2005 CRD applications.
THE COMMITTEE UNANIIMOUSLY RECOMMENDED TO OPEN THE 2005 CRD
APPLICATION CYCLE ON APRIL 16, 2005 AND ACCEPT APPLICATIONS UNTIL
MAY 31, 2005.
THERE BEING NO FURTHER BUSINESS, THE MEETING WAS ADJOURNED AT
9:15 A.M.
Respectfully Submitted
Michael A. Morales
Economic & Community Affairs Specialist