HomeMy WebLinkAbout050619_ra02 JEFFERSON COUNTY
BOARD OF COUNTY COMMISSIONERS
REGULAR AGENDA REQUEST
TO: Board of County Commissioners �A
Philip Morley, County Administrate ./U:/,//y
FROM: Mark McCauley, Central Serv. Director
DATE: May 6, 2019
SUBJECT: Letter of Intent Related to the Potential Use of County Property as a Site for
Affordable Housing
STATEMENT OF ISSUE:
Jefferson County has an acute shortage of affordable housing. To help increase the inventory of
affordable housing Olympic Community Action Programs (OIyCAP) is proposing a project to
build a 44 unit affordable housing facility in Port Townsend. The proposed project also would
house a child care/early learning program which would be available to residents of the affordable
housing facility and to other Jefferson County residents.
O1yCAP has identified a county parcel (948323702) for the proposed project that is located on
Castle Hill adjacent to the County's Community Development Department just southeast of the
intersection of 7th Street and Hendricks Street. OIyCAP and the county have been in discussions
regarding the proposed project over the past number of weeks. OIyCAP is seeking a Letter of
Intent from the county committing to make the parcel available for the project, so they can
pursue funding for the project. The county has signaled its willingness to support the proposed
project with a Letter of Intent. The Letter of Intent would give O1yCAP positive control over the
parcel for the time necessary to secure funding for the proposed project. The Letter of Intent
would lay out two possible paths forward should OIyCAP secure the required funds for the
proposed project: one is an option to lease and the other is a purchase and sale agreement. The
path chosen can be determined after the county provides the Letter of Intent.
ANALYSIS:
The Jefferson County Board of County Commissioners recognizes the acute shortage of
affordable housing in the county and are and always have been supportive of efforts to increase
the supply. Facilitating this proposed project for affordable housing by providing OIyCAP with
the Letter of Intent could result in a sizeable increase in the number of affordable housing units
available in the county, if O1yCAP is successful in obtaining the required funding. This parcel
sits near a grocery store, Jefferson Healthcare, Jefferson Transit bus routes and other amenities.
As such, it is a good location for affordable housing.
There are still some unanswered questions regarding the proposed project including funding and
City of Port Townsend permit requirements. The Letter of Intent is the first step in a lengthy and
complicated process—but the project cannot move forward without it. Importantly, OIyCAP
needs the signed Letter of Intent now, so it can apply on time for the first round of grant funding.
The proposed Letter of Intent, as negotiated between Jefferson County staff and O1yCAP, is
attached.
FISCAL IMPACT:
The Letter of Intent, in and of itself, has no fiscal impact. As proposed in the terms attached to
the Letter of Intent, there hopefully would be a subsequent sale of the half-acre commercial-
zoned property, or an annual lease for up to 75 years, both allowing 44 affordable housing units
to be created. This will represent a laudable investment by the County in an important housing
project that benefits the community. Whenever one path is taken, there can be a concomitant
opportunity cost, as staff has previously discussed with the Board.
RECOMMENDATION:
That the Board of County Commissioners approve the Letter of Intent.
REVIEWED BY:
" 3G
C
lip Morley, ounty e • ••• rator Date
LETTER OF INTENT
This Letter of Intent(LOI) is entered into as of the date of the last signature below by
Jefferson County, a Washington municipal corporation (the County) and Olympic Community
Action Programs, a Washington non-profit corporation (OIyCAP). This LOI serves as an outline
of the terms and conditions under which the parties propose that OIyCAP will enter into either
(a)a Purchase and Sale Agreement (PSA)or(b) an Option to Lease with the County for certain
real property.
It is the parties' intention that the provisions set forth in the attached Term Sheets be set
forth in greater detail in either a PSA or an Option to Lease. The language used is not necessarily
to be incorporated verbatim in the final document,and additional terms and provisions not set forth
below may be added to the final document as mutually agreed upon by the parties.
Although the parties understand that they shall not be contractually bound unless and until
they enter into a formal,written PSA or Option to Lease,the County acknowledges and agrees that
OIyCAP may use this Letter of Intent in grant funding applications as an expression of the
County's willingness to negotiate such PSA or Option to Lease. In consideration for O1yCAP's
efforts to secure funding for its intended project, the County and OIyCAP agree that between
execution of this LOI and August 31, 2019(i.e.,the deadline for the parties to enter into a binding
PSA or Option to Lease), the County shall not enter into any new leases or purchase agreements
or any extensions of any existing leases for the Property.
This LOI shall expire if not fully executed by end of business May 6, 2019.
ACCEPTED AND AGREED TO:
For Jefferson County For Olympic Community Action Programs
Dale Wilson
1..dallallilft2019-05-03
By: By:
T10:42:58-07:00
Title: Title: Executive Director
Date: Date: 4/3/2019
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TERM SHEET (purchase)
1. PROPERTY. The Property is legally described as follows:
Lots 1, 2, 7 and 8, in Block 237, of the Supplemental Plat of the Eisenbeis Addition to the
City of Port Townsend, as per plat recorded in Volume 2 of Plats,page 24, records of
Jefferson County, Washington;
TOGETHER WITH the West half of vacated Grant Street adjoining,pursuant to
Ordinance #1764.
EXCEPT that portion, if any, lying Southerly of the North 100 feet of said Block 237.
Situate in the Count of Jefferson, State of Washington.
The Property is also identified as Jefferson County Assessor's Tax Parcel 948-323-702.
2. BUYER. The Buyer shall be Olympic Community Action Programs (O1yCAP).
3. SELLER. The Seller shall be Jefferson County (the County).
4. PURCHASE PRICE.
a. The Parties acknowledge that the County is currently purchasing the Property
from James and Noreen McCarron(the McCarrons) under a Real Estate Contract
dated March 15, 2002 (recorded at Auditor's File Number 462554).
b. At Closing, O1yCAP shall pay the County 10 percent or less of the fair market
value (2019 FMV) of the Property (Purchase Price) as the purchase price for the
County's interest in the Property.
5. CLOSING DATE; CLOSING AGENT. Closing shall occur on or before September 1,
2020. Closing shall mean the date on which all documents are recorded, and the sales
proceeds are available for disbursement. Closing shall occur at First American Title
Company, 2424 S. Park Ave., Port Townsend, WA 98368, (360) 385-1322 (First
American Title), which shall act as Closing Agent, unless the parties agree in writing
otherwise. OIyCAP and the County shall deposit with the Closing Agent all instruments,
monies, and other documents reasonably required to complete the closing of the
transaction in accordance with the terms of the PSA.
6. POSSESSION AND OCCUPANCY. OIyCAP shall be entitled to possession and
occupancy of the Property on the Closing Date.
7. ESCROW/CLOSING COSTS. O1yCAP shall pay all closing costs.
8. CONVEYANCE OF TITLE. At closing, the County shall convey to OIyCAP fee
simple title to the Property by duly executed and acknowledged statutory warranty deed,
free and clear of all defects and encumbrances, except any defects or encumbrances
explicitly approved by O1yCAP.
9. THE PROJECT; 40-YEAR COMMITMENT TO AFFORDABLE HOUSING.
a. Project Defined. "Project"means construction and operation a two to four-story
multi-use building with a variety of sizes of residential apartment units and a child
care center, in which the residential apartment units must be offered for rent to
low income households at 60%of area median income or less.
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b. Minimum Length of the Project. "Minimum Length" of the Project shall be 40
years.
c. Limitation on Use of the Property. OIyCAP shall not use the Property for any
other purposes, except for the Project.
d. County's Interest in Affordable Housing. The County's willingness to convey the
Property to OIyCAP under these terms is based solely on OIyCAP's intent to
develop the Project and OIyCAP's demonstration of the financial viability of the
Project.
10. CONTINGENCIES; DUE DILIGENCE; EXTENSION OF CLOSING DATE.
Closing is contingent upon the following events and approvals. OIyCAP agrees to
proceed in good faith and with all deliberate speed to perform required due diligence to
meet the contingencies. If any of the contingencies are not met, upon notice from
OIyCAP to the County the Purchase and Sale Agreement(PSA) shall terminate, and the
Parties shall be released from any further obligations under that Agreement. The Closing
Date shall be extended as mutually agreeable to accommodate OIyCAP's ability to satisfy
these contingencies.
a. McCARRON CONTINGENCY. The Parties acknowledge that in order for the
County to convey the Property to OIyCAP via Statutory Warranty Deed, James
and Noreen McCarron(the McCarrons)must agree to convey a Partial Fulfillment
Deed under the existing Real Estate Contract between the County and the
McCarrons. Closing shall be contingent upon the McCarrons' willingness to do
so. O1yCAP shall have sole responsibility for obtaining such approval from the
McCarrons.
b. AUTHORIZED SALE CONTINGENCY. The County must be authorized by
law to sell the Property to OIyCAP for the Project at the Purchase Price. The
County and OIyCAP shall cooperate to fulfill all legal requirements for a sale of
the Property to OIyCAP for the Project at the Purchase Price, including but not
limited to compliance with RCW 39.33.015 and any other applicable provision of
law.
c. FINANCING CONTINGENCY. Closing shall be contingent upon OIyCAP
securing grants and loans in the amount sufficient for the development of the
Project. OIyCAP shall have sole discretion in determining whether it has
obtained sufficient funding.
d. INTENDED USE CONTINGENCY.
i. Closing shall be contingent upon O1yCAP providing to the County financing
agreements that bind O1yCAP and its lenders for the Project and the
requirement to provide residential apartment units for rent to low income
households at 60% of area median income or less for the Minimum Length.
ii. The financing agreements shall require a housing covenant agreement that
secure this requirement that must be recorded and run with the land.
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iii. The financing agreements shall comply with all applicable statutes,
regulations for financing that apply to agreements with the Washington State
Housing Finance Commission.
iv. If the financing agreements involve tax credits,the financing agreements shall
contain a covenant that OIyCAP and its successors and their lenders shall
comply with Section 42 of the Internal Revenue Code of 1986, as amended,
together with corresponding and applicable temporary, proposed, and final
Treasury Regulations, and Revenue Rulings and pronouncements issued or
amended regarding it by the U.S. Department of the Treasury or Internal
Revenue Service or as interpreted by any court of competent jurisdiction,to
the extent applicable to the Project
v. Area median income means median income in Jefferson County, Washington,
adjusted for family size, as estimated from time to time by the United States
Department of Housing and Urban Development(HUD). If HUD ceases to
provide such estimates of median income, then median income shall mean
such comparable figure for Jefferson County. Washington published or
reported by a federal, state, or local agency as the County shall select.
vi. The County shall be a third-party beneficiary of the financing agreements and
housing covenant agreements.
e. ECONOMIC VIABILITY CONTINGENCY.
i. No later than 60 days before closing, OIyCAP shall provide to the County an
Economic Viability Analysis that demonstrates to the County's satisfaction that
the Project is financially viable for the Minimum Period. At closing,the County
shall provide the Closing Agent a written statement that it accepts the Economic
Viability Analysis provided by OIyCAP.
ii. An "Economic Viability Analysis" is an analysis of the Project, prepared by a
qualified professional economist or financial analyst experienced with
affordable housing,which addresses the economic viability of the Project using
generally accepted accounting principles (GAAP) and includes:
1. The Development Costs of the Project, including:
a. All direct costs, including any Lease costs, site preparation and
demolition; residential construction costs; and,parking costs;
b. All indirect costs, including any city permits and fees; architecture,
engineering, and other types of consulting services; taxes, insurance,
legal, and accounting services; affordable housing requirement
incentives;miscellaneous/other services; and, sales and marketing; and,
c. Financing costs and whether the necessary financial resources are
available for OIyCAP to undertake the Project;
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2. Appropriate assurance by lending institutions or other financial entities that
O1yCAP has or can reasonably obtain adequate financial support for the
Project once the PSA is approved by the County;
3. An analysis of tax benefits to any investors, including any federal Low-
income Housing Tax Credits (LIHTC), tax losses, and Historic Tax and
Historic Tax Credit and any state tax credits; and,
iii. A projected cash flow statement analysis for the Project for the term of the
PSA, including estimates of the annual net operating income (NOI) of the
apartment prototype, which is the difference between total project income
(annual rents) and project expenses, including operating costs, rent
restrictions, and vacancies.
f. INSPECTION CONTINGENCY. Closing shall be contingent upon OIyCAP's
subjective satisfaction the Property is appropriate for the Project. OIyCAP will bear
all costs to evaluate the Property, including but not limited to all studies and
investigations, designs, and consultations with relevant permitting jurisdictions.
g. NEIGHBORING PROPERTY OWNER APPROVAL CONTINGENCY. The
parties are aware of an agreement dated December 13, 1983, recorded against the
Property, between predecessors of the County, predecessors of the McCarrons,
predecessors of Castle Hill Associates, LLC (CHA), and predecessors of Quality
Food Centers, Inc. (QFC)that runs with the land which creates an easement and right
of way in which the County, the McCarrons, CHA and QFC must give permission for
changes to parking access and ingress and egress. Closing shall be contingent upon
O1yCAP receiving written permission from the neighboring property owners
waiving/terminating the easement/restrictions as applied to the Property. However,
this contingency shall not apply if OIyCAP demonstrates to the County's satisfaction
that the Project can be constructed without violating the easement/restrictions.
h. TITLE SEARCH CONTINGENCY. At closing, OIyCAP shall provide the County
with a title search for the Property performed by First American Title.
i. COMMISSIONER APPROVAL CONTINGENCY. The PSA is contingent upon
written approval by the County Board of Commissioners.
11. ESCROW AND CLOSING.
a. The PSA shall constitute not only the agreement of purchase and sale between OIyCAP
and the County,but also instructions to the Closing Agent for the consummation of the
PSA through the escrow. The Closing Agent shall not prepare any further escrow
instructions restating or amending the PSA unless specifically so instructed by the
parties. Subject to the reasonable approval of the parties, the Closing Agent may
include its standard general escrow provisions.
b. As soon as practical after the receipt of the PSA, the Closing Agent shall ascertain the
effective date of the agreement and advise the parties in writing,on the date ascertained.
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c. The Closing Agent is authorized and instructed to conduct the escrow in accordance
with the PSA, applicable law and custom and practice of the community in which the
Closing Agent is located, including any reporting requirements of the Internal Revenue
Code.
d. Subject to satisfaction of the contingencies described in the PSA, the Closing Agent
shall close the escrow (the closing) by recording a statutory warranty deed, the Deed
Restriction Covenant Agreement,and the other documents required to be recorded,and
by disbursing any funds and documents in accordance with the PSA.
e. O1yCAP shall pay all of the Closing Agent's charges and OIyCAP shall pay the usual
recording fees and any required documentary transfer taxes. O1yCAP shall pay the
premium for a standard coverage owner's or joint protection policy of title insurance.
f. The Closing Agent shall verify that all of the contingencies described in the PSA have
been satisfied or waived prior to closing.
g. If this transaction is terminated for non-satisfaction and non-waiver of a contingency,
then neither of the parties shall thereafter have any liability to the other under the PSA,
except to the extent of a breach of any affirmative covenant or warranty in the PSA. In
the event of such termination, the Closing Agent promptly shall refund all funds
deposited by O1yCAP with the Closing Agent,less only the Closing Agent cancellation
fees and costs, all of which shall be OIyCAP's obligation. If this transaction is
terminated as a result of the County's breach of the PSA then OIyCAP shall be
promptly refunded all funds deposited by OIyCAP with the Closing Agent and the
cancellation fees and costs.
h. The closing shall occur on the closing date or as soon thereafter as the escrow is in
condition for closing; provided, however, that if the closing does not occur by the
closing date and said date is not extended by mutual instructions of the parties, a party
not then in default under the PSA may notify the other party and the Closing Agent, in
writing,that unless the closing occurs within 5 business days following said notice,the
escrow shall be deemed terminated without further notice or instructions.
i. Except as otherwise provided herein, the termination of escrow shall not relieve or
release either OIyCAP from its obligation to pay the Closing Agent's fees and costs or
constitute a waiver, release or discharge of any breach or default that has occurred in
the performance of the obligations, agreements, covenants or warranties.
12. POSSESSION. Possession of the Property shall be given to OIyCAP at closing, subject
to the rights of tenants under any existing leases or licenses.
13. SALE IS "AS IS." OIyCAP acknowledges and agrees that the Property is sold and
conveyed to, and accepted by, OIyCAP in an "as is" condition with all faults. OIyCAP
acknowledges that the reduced purchase price of the Property is due, in part,to OIyCAP's
willingness to take title to the Property in an"as is" condition.
14. OLYCAP'S INVESTIGATION.
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a. OIyCAP has investigated and has knowledge of operative or proposed governmental
laws and regulations(including,but not limited to,zoning,environmental,and land use
laws and regulations) to which the Property is or may be subject and accepts the
Property solely upon the basis of its review and determination of the applicability and
effect of such laws and regulations.
b. OIyCAP hereby acknowledges that, except as otherwise stated in the PSA, OIyCAP is
purchasing the Property in its existing condition and will,by the time called for herein,
make or have waived all inspections of the Property OIyCAP believes are necessary to
protect its own interest in, and its contemplated use of, the Property.
c. The parties acknowledge that, except as otherwise stated in the PSA, no
representations, inducements, promises, agreements, assurances, oral or written,
concerning the Property, or any aspect of the occupational safety and health laws,
Environmental Law,or any other act,ordinance or law,have been made by either party,
or relied upon by either party. `Environmental Law" means any law or regulation
relating to health, pollution, or protection of the environment.
d. OIyCAP acknowledges that it is entering into the PSA based on OIyCAP's own
investigation of the physical and environmental conditions of the Property, including
subsurface conditions.
e. OIyCAP assumes the risk that adverse physical and environmental conditions may not
have been revealed by OIyCAP's own investigation.
15. NO REPRESENTATION BY THE COUNTY RELATING TO THE CONDITION,
VALUE,FITNESS,OR ZONING OF THE PROPERTY. OIyCAP acknowledges that
the County, its agents and employees, and other persons acting on behalf of the County,
have made no representation or warranty of any kind in connection with any matter relating
to the condition, value, fitness, or zoning of the Property upon which OIyCAP has relied
directly or indirectly for any purpose.
16. NO REPRESENTATION BY THE COUNTY RELATING TO THE PRIOR USE OF
THE PROPERTY. The County makes no representation about the prior use of the
Property, including whether and Hazardous Substances were ever generated or released at
the Property. "Hazardous Substances"means pollutants, contaminants,toxic or hazardous
wastes, or any other substances, the removal of which is required or the use of which is
restricted, prohibited, or penalized by any Environmental Law.
17. OLYCAP'S WAIVER OF CLAIMS. OIyCAP waives, releases, remises, acquits, and
forever discharges the County, the County's predecessors in title, successors, employees,
agents,or any other person acting on behalf of the County,of and from any claims,actions,
causes of action, demands, rights, damages, costs, expenses or compensation whatsoever,
direct or indirect, known or unknown, foreseen or unforeseen, which OIyCAP now has or
which may arise in the future on the account of or in any way growing out of or connected
with the physical or environmental condition of the Property at the time of the execution
of the PSA and to the extent the same are not known to the County.
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18. FURTHER DOCUMENTS AND ASSURANCES. The parties shall each, diligently and
in good faith, undertake all actions and procedures reasonably required to place the escrow
in condition for closing as and when required by the PSA. The parties agree to provide all
further information, and to execute and deliver all further documents, reasonably required
by the Closing Agent.
19. OLYCAP'S INDEMNITY.
a. O1yCAP agrees to defend, hold harmless and indemnify the County and its officers,
officials, employees, agents and volunteers against all loss and damage and any and all
claims and actions arising out of the past, present or future ownership of or operations
at the Property, including, without limitation, costs, demands, expenses, fines,
judgments, lawsuits, liabilities, settlements,and other amounts actually and reasonably
incurred in connection with any liability, suit, action, loss, or damage.
b. Should a court of competent jurisdiction determine that the PSA is subject to RCW
4.24.115, then, in the event of liability for damages arising out of bodily injury to
persons or damages to property caused by or resulting from the concurrent negligence
of O1yCAP and the County, its officers, officials, employees, agents and volunteers,
O1yCAP's liability, including the duty and cost to defend, hereunder shall be only to
the extent of O1yCAP's negligence.
c. The indemnification provided in the PSA constitutes O1yCAP's waiver of immunity
under Industrial Insurance, Title 51 RCW, solely for the purposes of this
indemnification. The parties have mutually negotiated this waiver.
d. The provisions of indemnity shall survive the expiration or termination of the PSA.
20. DAMAGE TO COUNTY PROPERTY DURING CONSTRUCTION OF THE
PROJECT. O1yCAP shall be responsible for the repair of any and all damage caused
during the construction of the Project to other property owned by County. For the
avoidance of doubt, property owned by the County includes parking lots and their asphalt
coatings.
21. HAZARDOUS SUBSTANCES. If at any time after the closing,the Property is found to
be contaminated by any Hazardous Substance, OIyCAP shall defend, indemnify, and hold
harmless the County and its officers, officials, employees, agents and volunteers for any
investigation or the remediation of such contamination to the satisfaction of a lead
regulatory agency and shall defend, indemnify, and hold harmless the County for any and
all claims and actions made related to the presence of any Hazardous Substance at the
Property, pursuant to the indemnity provision in Section 20.
22. RELEASE OF COUNTY FROM RESTRICTIONS IN THE DECEMBER 13, 1983
AGREEMENT. After it obtains title to the Property, OIyCAP shall release the County
from O1yCAP's rights to enforce against the County the December 13, 1983 agreement
described in the Neighboring Property Owner Contingency, above. At closing, OIyCAP
shall provide the County with a written waiver of any restrictions in the December 13,
1983 agreement that apply to other property owned by the County that runs with the land.
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OIyCAP agrees that this waiver may be recorded by the County at no expense to
O1yCAP. OIyCAP agrees there is no adequate remedy at law for breach of this section
and that this section may be enforced by specific performance.
23. SALE OF THE PROPERTY PRIOR TO THE END OF THE MINIMUM
LENGTH FOR THE PROJECT.
a. If prior to the Minimum Length,the Property is condemned, destroyed, sold, becomes
subject to eminent domain, or its use changes to something other than the Project,
O1yCAP shall pay the County:
i. The 2019 FMV;
ii. Less the Purchase Price;
iii. Plus any amounts the County was required to pay under the October 1, 2018
interlocal agreement between the County and Jefferson County Public Hospital
District No. 2, a political subdivision under the laws of the State of Washington
(Jefferson Healthcare), as amended on December 18, 2018;
iv. Plus the amount the County paid for new lighting on the parking lot at the
Property that had to be removed as a result of the Project;
v. Plus the County's portion of the County's Shared Appreciation.
O1yCAP's payment to the County shall be due and payable to the County 30 days after
the County's demand for payment made to OIyCAP or its successors.
b. The County's Shared Appreciation(CSA) shall be determined by the following
formula: CSA= (NP-TDC) x 2019 FMV/TDC, where:
i. 2019 FMV means the fair market value at the time of the transfer of the Property
from the County to OIyCAP.
ii. NP means: (A) The sales price or fair market value, as determined by an
appraisal satisfactory to the County; (B) Plus, any insurance proceeds,
condemnation proceeds or eminent domain proceeds due or payable to OIyCAP
or its successor; (C) Less, any outstanding balance, including unpaid interest, on
loans secured by liens recorded against the Property; and, (D) Less any reasonable
and necessary costs of sale (if the Property is sold), including appraisal, real estate
commissions,real property excise tax, escrow fees, recording fees, title and
insurance premiums.
iii. TDC means the total development costs, including acquisition costs: (A) The
purchase price; (B) The costs of surveys and inspections; (C) Appraisal, title
insurance, escrow fees and recording fees; and, the cost of construction, including
any reasonable and necessary: (D) Hazardous Substance remediation required by
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a governmental agency; (E)Architectural and engineering fees; and, (F)
Construction management fees.
24. ASSIGNMENT. Provided the assignment requires compliance with all the terms and
conditions of the PSA, the PSA shall be assignable by O1yCAP to another entity
(including, but not limited to, an LLC or LLLP)which is controlled by OIyCAP, without
additional approval by the County.
25. EXCLUSIVITY. The County shall not initiate or carry on negotiations for the sale or
lease of the Property with any other party prior to Closing.
26. USE OF PROPERTY DURING DUE DILIGENCE PERIOD. O1yCAP understands
that the County is currently providing parking the Property to Jefferson Healthcare under
and interlocal agreement. To the extent O1yCAP requires occasional and limited use of
the Property to fulfill its due diligence needs,the County agrees to cooperate with
obtaining authorization from Jefferson Healthcare to make the Property available for such
needs.
27. GENERAL PROVISIONS. The PSA shall contain standard contract provisions
including, but not necessarily limited to the following:
a. Notice. The PSA shall identify contact information for each party and provide for
how notice shall be given.
b. Controlling Law. The parties agree that the PSA will be entered into in the State
of Washington. The PSA shall be governed by and construed in accordance with
the laws of the United States,the State of Washington and the County of Jefferson,
as if applied to transactions entered into and to be performed wholly within
Jefferson County, Washington between Jefferson County residents. No party shall
argue or assert that any state law other than Washington law applies to the
governance or construction of the PSA.
c. Jurisdiction and Venue. Should either party bring any legal action under the PSA,
each party in such action shall bear the cost of its own attorney's fees and court
costs. The venue for any legal action shall be solely in the appropriate state court
in Jefferson County, Washington, subject to the venue provisions for actions
against counties in RCW 36.01.050.
d. Integration Clause. The PSA shall contain an integration clause which provides
that the PSA memorializes the entire agreement of the parties and contains all its
parts, that no party made any representation or promise that is not contained in the
PSA, that the PSA is not based any inducement, promise or representation,
expressed or implied, which is not contained in the PSA, and that the PSA
supersedes all prior or simultaneous representations, discussions,negotiations, and
agreements, whether written or oral, within the scope of the PSA.
e. Time is of the Essence. Time is of the essence as to all terms and conditions of the
PSA.
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END OF TERM SHEET (purchase)
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TERM SHEET (Lease)
1. PROPERTY.
The Property is legally described as follows:
Lots 1, 2, 7 and 8, in Block 237, of the Supplemental Plat of the Eisenbeis Addition to the
City of Port Townsend, as per plat recorded in Volume 2 of Plats, page 24, records of
Jefferson County, Washington;
TOGETHER WITH the West half of vacated Grant Street adjoining,pursuant to Ordinance
#1764.
EXCEPT that portion, if any, lying Southerly of the North 100 feet of said Block 237.
Situate in the Count of Jefferson, State of Washington.
The Property is also identified as Jefferson County Assessor's Tax Parcel 948-323-702.
2. LESSEE. The Lessee shall be Olympic Community Action Programs, a non-profit
community action agency (OIyCAP).
3. LESSOR. The Lessor shall be Jefferson County, a municipal corporation, (the County).
4. OPTION PERIOD. The initial term of the Option to Lease shall be 12 months. During
that time, OIyCAP shall pursue diligently investigation of the Property to determine its
feasibility for the Project (as described in Paragraph 15.c below) as well as to pursue
financing for the Project. The Option Period will end at the earlier of(a) 12 months from
the execution of the Option to Lease plus any extension exercised pursuant to Paragraph 6
below; or(b) execution of the Lease.
5. OPTION PAYMENT. As consideration for the Option to Lease, OIyCAP shall pay the
County ten dollars ($10.00).
6. EXTENSION. As a further part of the consideration identified in Paragraph 5 above,
OIyCAP will be granted the right to extend the Option to Lease for 1 additional period of
6 months on the same terms and conditions provided in the original Option, as long as (a)
OIyCAP exercises the option to extend in writing to the County before the expiration of
the original Option Period;and,(b)OIyCAP describes its due diligence efforts in sufficient
detail to satisfy the County that OIyCAP has been actively pursuing its evaluation of the
Property and the Project.
7. OPTION AND LEASE CONTINGENCIES.
a. NEIGHBORING PROPERTY OWNER APPROVAL CONTINGENCY. The
parties are aware of an agreement dated December 13, 1983, recorded against the
Property, between predecessors of the County, predecessors of James and Noreen
McCarron (the McCarrons), predecessors of Castle Hill Associates, LLC (CHA), and
predecessors of Quality Food Centers, Inc. (QFC)that runs with the land which creates
an easement and right of way in which the County, the McCarrons, CHA, and QFC
must give permission for changes in parking access and ingress and egress. No later
than the entry into the Option to Lease, OIyCAP shall obtain written permission from
the neighboring property owners waiving/terminating the easement/restrictions as
applied to the Property. However, this contingency shall not apply if O1yCAP
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demonstrates to the County's satisfaction that the Project can be constructed without
violating the easement/restrictions.
b. FINANCING CONTINGENCY. The County and OIyCAP's willingness to enter
into the final Lease is contingent upon OIyCAP securing grants and loans in the amount
sufficient for the development of the project. OIyCAP shall have sole discretion to
obtain funding for development of the Project. However, no later than 60 days before
the entry into the final Lease, OIyCAP must demonstrate to satisfaction of the County
that it has secured commitments for funding for development of the Project.
c. TITLE SEARCH CONTINGENCY. No later than 180 days before the entry into the
final Lease, OIyCAP provide the County with a title search for the Property performed
by a First American Title Company.
8. NO ASSIGNMENT. OIyCAP shall not sublet or assign its performance of the Option to
Lease without the express written consent of the County.
9. USE OF PROPERTY DURING OPTION PERIOD. OIyCAP understands that the
County currently has an interlocal agreement with Jefferson Healthcare for parking at the
Property. To the extent OIyCAP requires occasional and limited use of the Property to
fulfill its due diligence needs,the County agrees to cooperate with obtaining any necessary
authorization from Jefferson Healthcare to make the Property available for such needs.
10. EXCLUSIVITY. The County shall not initiate or carry on negotiations for the sale or
lease of the Property with any party other than OIyCAP during the Option Period or any
extensions. This provision shall prohibit the County from extending the current parking
interlocal agreement with Jefferson Healthcare or any other entity.
11. TERMINATION. The Option to Lease shall terminate at the end of the Option Period.
12. CONTROLLING LAW. The parties agree that the Option to Lease is entered into in the
State of Washington. The Option to Lease shall be governed by and construed in
accordance with the laws of the United States, the State of Washington and the County of
Jefferson, as if applied to transactions entered into and to be performed wholly within
Jefferson County, Washington between Jefferson County residents. No party shall argue
or assert that any state law other than Washington law applies to the governance or
construction of the Option to Lease.
13. JURISDICTION AND VENUE. Should either party bring any legal action, each party
in such action shall bear the cost of its own attorney's fees and court costs. The venue for
any legal action shall be solely in the appropriate state court in Jefferson County,
Washington, subject to the venue provisions for actions against counties in RCW
36.01.050.
14. ENTIRE AGREEMENT. The Option to Lease memorializes the entire agreement of the
parties and the Option to Lease contains all its parts. No party made any representation or
promise that is not contained in the Option to Lease. The Option to Lease is not based any
inducement,promise or representation, expressed or implied,which is not contained in the
Option to Lease. The Option to Lease supersedes all prior or simultaneous representations,
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discussions, negotiations, and agreements, whether written or oral, within the scope of the
Option to Lease.
15. EXERCISE OF OPTION. OIyCAP may exercise its option at any time during the Option
Period by written notice to the County. Upon exercise of the Option,the Parties shall enter
into a Lease on the terms below:
a. LEASE TERM. The term of the final Lease shall be 75 years or the minimum
number of years required for structuring debt and equity financing necessary to
complete the project, whichever is shorter.
b. RENT. OIyCAP shall pay the County ten dollars per year($10/year) for the term
of the Lease.
c. DEVELOPMENT AND USE OF THE PROPERTY DURING THE LEASE
TERM.
i. The County's willingness to enter into the final Lease is contingent upon
OIyCAP's representation that it will develop and use the Property for the
Project specified in Paragraph 15.c.ii.
ii. OIyCAP shall commit to construct and operate a two to four-story multi-use
building with a variety of sizes of residential apartment units and a child care
center(the Project). OIyCAP must offer the residential apartment units for rent
to low income households at 60%of area median income or less. OIyCAP shall
not use the Property for any other purposes, without the written consent of the
County.
d. ECONOMIC VIABILITY ANALYSIS.
i. No later than 60 days before the entry into the final Lease, OIyCAP shall
provide to the County an Economic Viability Analysis.
ii. An "Economic Viability Analysis" is an analysis of the Project, prepared by a
qualified professional economist or financial analyst experienced with
affordable housing,which addresses the economic viability of the Project using
generally accepted accounting principles (GAAP) and includes:
1. The Development Costs of the Project, including:
a. All direct costs, including any Lease costs, site preparation and
demolition; residential construction costs; and, parking costs;
b. All indirect costs, including any city permits and fees; architecture,
engineering, and other types of consulting services; taxes, insurance,
legal, and accounting services; affordable housing requirement
incentives; miscellaneous/other services; and, sales and marketing;and,
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c. Financing costs and whether the necessary financial resources are
available for O1yCAP to undertake the Project;
2. Appropriate assurance by lending institutions or other financial entities that
O1yCAP has or can reasonably obtain adequate financial support for the
Project once the Lease is approved by the County;
3. An analysis of tax benefits to any investors, including any federal Low-
income Housing Tax Credits (LIHTC), tax losses, and Historic Tax and
Historic Tax Credit and any state tax credits; and,
4. A projected cash flow statement analysis for the Project for the term of the
Lease, including estimates of the annual net operating income (NOI) of the
apartment prototype, which is the difference between total project income
(annual rents) and project expenses, including operating costs, rent
restrictions, and vacancies.
e. DEFAULT. The Lease shall contain mutually acceptable terms of default and
remedy.
f. TENANT IMPROVEMENTS.
i. OIyCAP shall construct the Project, including all tenant improvements.
ii. O1yCAP shall obtain all financing necessary for the Project,including all tenant
improvements.
iii. The County shall have no obligation to construct, develop or obtain financing
for the Project, including any tenant improvements.
iv. The final Lease shall contain mutually acceptable terms for the disposition of
tenant improvements upon termination.
g. UTILITIES AND OTHER COSTS. During the term of the Lease, O1yCAP or
assignee shall be responsible for all utilities and other costs incurred for the
Project.
h. SIGNS. O1yCAP may erect, install, and maintain a sign of a kind and size in a
location,and as first approved in writing by the County and approved,as required,
by the City of Port Townsend or any other applicable local, state, or federal entity.
O1yCAP will not erect, install, or maintain any sign other than in accordance with
this section.
i. ABANDONMENT BY OLYCAP. The Lease shall contain mutually acceptable
terms for addressing abandonment by OIyCAP.
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j. TERMINATION. The final Lease shall include mutually acceptable terms for
any termination of the Lease prior to the end of the Lease Term, including notice
provisions and rights to cure,
k. SUBORDINATION AND ATTORNMENT. The final Lease shall contain a
mutually acceptable provision to address subordination and attornment.
1. SALE BY THE COUNTY. In the event of any sale, transfer or lease by the
County of the Property or any interest in the Property or assignment by the County
of the Lease or any interest of the County in the Lease to the extent that the
purchaser,transferee,tenant or assignee assumes the covenants and obligations of
the County under the Lease,the County will without further written agreement be
freed and relieved of liability under such covenants and obligations. The County
may not assign, sell, transfer, or lease any interest in or to the Property without
providing OIyCAP with at least 180 calendar days advance notice prior to the
execution of any agreement pertaining to any such sale,transfer,or lease. OIyCAP
shall have the first right of refusal to acquire the property for market value for 180
days after such notice of pending sale.
m. LIENS. OIyCAP will immediately upon demand by the County remove or cause
to be removed and afterwards institute and diligently prosecute any action that
pertains to the County or the Property, any builders' or other lien or claim of lien
noted or filed against or otherwise constituting an encumbrance on any title of the
County that results from an act or omission of OIyCAP. Without limiting the
obligations of OIyCAP, the County may cause the same to be removed, in which
case OIyCAP will pay to the County as additional rent, such cost including the
County's legal costs.
n. DAMAGE TO THE PROPERTY. If the Property, or any part of the Property,
is damaged partially by fire or other casualty whether or not due to OIyCAP's
negligence or willful act or that of OIyCAP's employee, tenant, agent, or visitor,
the Property will be repaired promptly by the OIyCAP.
o. EMINENT DOMAIN AND EXPROPRIATION. If during the term of the
Lease, title is taken to the whole or any part of the Property by any competent
authority under the power of eminent domain or by expropriation, which taking,
in the reasonable opinion of the County, does not leave a sufficient remainder to
constitute an economically viable building,the County may at its option,terminate
the Lease on the date possession is taken by or on behalf of such authority. Upon
such termination,O1yCAP will immediately deliver up possession of the Property.
In the event of any such taking, OIyCAP will have no claim upon the County for
the value of its property or the unexpired portion of the term of the Lease, but the
parties will each be entitled to separately advance their claims for compensation
for the loss of their respective interests and to receive and retain such
compensation as may be awarded to each respectively. If an award of
compensation made to the County specifically includes an award for OIyCAP,the
County will account for that award to OIyCAP and vice versa.
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p. CONDEMNATION. A condemnation of the tenant improvements or any portion
of the Property will result in termination of the Lease. The County will receive the
total of any consequential damages awarded because of the condemnation
proceedings. In the event of any such condemnation, O1yCAP will have no claim
upon the County for the value of its property or the unexpired portion of the term
of the Lease,but the parties will each be entitled to separately advance their claims
for compensation for the loss of their respective interests and to receive and retain
such compensation as may be awarded to each respectively. If an award of
compensation made to the County specifically includes an award for O1yCAP,the
County will account for that award to O1yCAP and vice versa.
q. REPAIRS AND ALTERATIONS.
i. OIyCAP covenants with the County to ensure that the Property is occupied in a
tenant-like manner and not to permit waste. OIyCAP shall always and at its
sole expense repair, maintain and keep the Property (reasonable wear and tear,
damage by fire, lightning, tempest, structural repairs, and repairs necessitated
from hazards and perils against which O1yCAP is required to insure, excepted).
ii. O1yCAP shall keep in good order, condition and repair the non-structural
portions of the interior of the Property and every part of the Property, including,
without limiting the generality of the foregoing, all equipment within the
Property, fixtures, walls, ceilings, floors, windows, doors, plate glass and
skylights located within the Property. Without limiting the generality of the
foregoing, O1yCAP will keep, repair, replace and maintain all glass, wiring,
pipes, and mechanical apparatus in, upon or serving the Property in good and
tenantable repair at its sole expense.
iii. O1yCAP shall pay promptly all contractors, material suppliers and workers
providing services to O1yCAP so as to minimize the possibility of a lien
attaching to the Property. Should any claim of lien be made or filed as to any
services provided to O1yCAP, OIyCAP promptly shall cause the same to be
discharged.
r. CARE AND USE OF PREMISES.
i. OIyCAP shall dispose of any trash at the Property in a timely,tidy,proper, and
sanitary manner.
ii. OIyCAP shall not engage in or permit any illegal trade or activity on or about
the Property.
iii. OIyCAP shall comply with standards of health, sanitation, fire, housing, and
safety as required by law.
iv. OIyCAP shall ensure that the hallways, passages and stairs of buildings on the
Property will be used for no purpose other than going to and from the Property
and O1yCAP will not allow those areas to be encumbered with boxes, furniture
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or other material or place or leave rubbish in those areas and other common
areas.
s. SURRENDER THE PROPERTY AT THE END OF THE TERM. The final
Lease shall contain mutually acceptable terms surrender of the Property at the end
of the term.
t. OPTION TO PURCHASE AT THE END OF THE TERM. The final Lease
shall include mutually acceptable provisions for OIyCAP to purchase the Property
at the end of the term of the Lease.
u. HAZARDOUS SUBSTANCES.
i. "Hazardous Substances" means pollutants, contaminants, toxic or hazardous
wastes, or any other substances, the removal of which is required or the use of
which is restricted, prohibited, or penalized by any Environmental Law.
ii. "Environmental Law"means any law or regulation relating to health,pollution,
or protection of the environment.
iii. OIyCAP shall not keep or allow others to keep any Hazardous Substances at
the Property. OIyCAP shall by provision in any agreement for use or sale of
any portion of the Property require that any tenant or purchaser not keep any
Hazardous Substances at the Property.
iv. OIyCAP represents and warrants that it will during the term of the Lease
conduct its operations on the Property in compliance with all applicable
Environmental Law.
v. If at any time during or after the term of the Lease, the Property is found to be
contaminated by any Hazardous Substance, OIyCAP shall defend, indemnify,
and hold harmless the County for any investigation or the remediation of such
contamination to the satisfaction of a lead regulatory agency and for the defense
and indemnity of the County for any claims made related to the presence of any
Hazardous Substance at the Property, pursuant to the indemnity provision in
this Lease.
v. FORCE MAJEURE. In the event that the County or OIyCAP will be unable to
fulfill, or shall be delayed or prevented from the fulfillment of, any obligation in
the Lease by reason of municipal delays in providing necessary approvals or
permits, the other party's delay in providing approvals as required in the Lease,
strikes, labor troubles, third-party lockouts, inability to procure materials or
services, power failure, restrictive governmental laws or regulations, fire, flood,
earthquake, lightning, storm, acts of God or our country's enemies, riots,
insurrection, sabotage, rebellion, war or other reasons of like nature beyond the
reasonable control of the party delayed or prevented from fulfilling any obligation
in the Lease (excepting any delay or prevention from such fulfillment caused by a
lack of funds or other financial reasons) and provided that such party uses all
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reasonable diligence to overcome such unavoidable delay,then the time period for
performance of such an obligation will be extended for a period equivalent to the
duration of such unavoidable delay.
w. COMPLIANCE WITH RESIDENTIAL LANDLORD TENANT ACT.
OIyCAP covenants at all times to comply with the Residential Landlord-Tenant
Act of 1973, Chapter 59.18 RCW as it exists now or is amended in the future for
all housing units O1yCAP leases at the Property. If at any time during or after the
term of the Lease, the Property is found to be in violation of Chapter 59.18 RCW
as it exists now or is amended in the future, O1yCAP shall defend, indemnify, and
hold harmless the County for any liability incurred by the County arising from to
such violation, pursuant to the indemnity provision in this Lease.
x. REMEDIES CUMULATIVE. No reference to or exercise of any specific right
or remedy by either party will prejudice or preclude either party from any other
remedy whether allowed at law or in equity or expressly provided for in the Lease.
No such remedy will be exclusive or dependent upon any other such remedy, but
each party may from time to time exercise any one or more of such remedies
independently or in combination.
y. PERFORMANCE UPON DEFAULT. If either party fails to observe, perform
or keep any of the provisions of the Lease to be observed,performed or kept by it
and such failure is not rectified within the time limits specified in the Lease, the
other party-may, but will not be obliged to, at its discretion and without prejudice,
rectify the default of that party. Each party will have the right to enter the Property
for the purpose of correcting or remedying any default of the other party and to
remain until the default has been corrected or remedied;however,any expenditure
by such party incurred in any correction of a default of the other party will not be
deemed to waive or release such default or the party's right to take any action as
may be otherwise permissible under the Lease in the case of any default.
z. CONDITION PRECEDENT TO EFFECTIVENESS OF THIS
AGREEMENT. The Lease is contingent upon written approval by the County
Board of Commissioners.
aa. CONTROLLING LAW. It is understood and agreed that the Lease is entered
into in the State of Washington. The Lease shall be governed by and construed in
accordance with the laws of the United States, the State of Washington, and the
County of Jefferson, as if applied to transactions entered into and to be performed
wholly within Jefferson County, Washington between Jefferson County residents.
No party shall argue or assert that any state law other than Washington law applies
to the governance or construction of the Lease.
bb. JURISDICTION AND VENUE. Should either party bring any legal action,each
party in such action shall bear the cost of its own attorney's fees and court costs.
The venue for anylegal action shall be solelyin theappropriate state court in
g
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Jefferson County, Washington, subject to the venue provisions for actions against
counties in RCW 36.01.050.
cc. ENTIRE AGREEMENT. The Lease memorializes the entire agreement of the
parties and all parts of the Lease are listed in the Lease. No representation or
promise not expressly contained in the Lease has been made. The parties are not
entering into the Lease based on any inducement, promise or representation,
expressed or implied, which is not expressly contained in the Lease. The Lease
supersedes all prior or simultaneous representations,discussions,negotiations,and
agreements, whether written or oral, within the scope of the Lease.
dd. LEGAL AND REGULATORY COMPLIANCE. OIyCAP shall,in performing
the services contemplated by the Lease, faithfully observe, and comply with all
federal,state,and local laws,ordinances and regulations,applicable to the services
to be rendered under the Lease.
ee. INDEMNITY. The final Lease shall contain mutually acceptable terms of
indemnification.
ff. DAMAGE TO COUNTY PROPERTY DURING CONSTRUCTION OF
THE PROJECT. OIyCAP shall be responsible for the repair of any and all
damage caused to the Property or adjacent County property, caused during the
construction of the Project. For the avoidance of doubt, property owned by the
County includes parking lots and their asphalt coatings.
gg. INSURANCE REQUIREMENTS. The final Lease shall contain mutually
acceptable terms of insurance requirements, including required insurance
coverages, such as workers compensation, commercial automobile liability
insurance and general liability insurance.
hh. ASSIGNMENT. Without the prior, express, and written consent of the County,
OIyCAP will not assign the Lease. Any assignment of the Lease without the prior
written consent of the County will be void and will, at the County's option,
terminate the Lease. The Lease shall not be assignable by operation of law.
ii. SUBLETTING. OIyCAP shall have exclusive control of the Property during the
term of the Lease. Provided OIyCAP complies with all the terms and conditions
of the Lease, OIyCAP may sublet the Property or portions of the Property.
jj. BINDING ON SUCCESSORS AND ASSIGNS. The covenants and agreements
of the Lease shall be binding upon the heirs, executors, administrators, successors
and assigns of all parties.
kk. MATERIAL TERMS. For the avoidance of doubt, all terms, conditions, and
representations of the Lease are material terms.
11. TIME IS OF THE ESSENCE. Time is of the essence in the Lease.
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mm. REPRESENTATIONS. The Lease will contain customary
representations regarding the condition of the Property for the type of Lease
contemplated. The parties shall represent to each other that each party has the
necessary authority to enter into the transaction contemplated by the Lease.
END OF TERM SHEET (Lease)
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