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STRATEGIC OUTCOMES |
ACTION |
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Department: |
☒ Safe & Prosperous |
☐ Motion |
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City Administration |
☒ Active & Appealing |
☒ Resolution |
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☐ Respected & Responsible |
☐ Ordinance - Introduction |
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Division: |
☐ Connected & Engaged |
☐ Ordinance - Adoption |
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Economic Development |
☐ Unique & Creative |
☐ Public Hearing |
TITLE: t
Economic and Historic Downtown Redevelopment Agreement: Hotel San Carlos of Yuma L.L.C
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SUMMARY RECOMMENDATION: Summary Recommendation
Approve the Economic and Historic Downtown Redevelopment Agreement (Development Agreement) for the sale of the historic San Carlos Hotel and payment of $300,000 to the City of Yuma. (City Attorney’s Office) (Richard Files)
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STRATEGIC OUTCOME:
The approval of this Development Agreement will further the City Council’s strategic outcomes of Safe and Prosperous and Active and Appealing by encouraging and facilitating the redevelopment and reuse of the historic San Carlos Hotel and enhancing the economic and social welfare of historic downtown Yuma and the residents of the City.
REPORT:
In 1994, the City of Yuma entered into an agreement with Housing America Corporation (“HAC”) for a loan of federal Community Development Block Grant (“CDBG”) funds for a low-income housing project at the historic San Carlos Hotel located at 106 East 1st Street, Yuma, Arizona 85364 (“San Carlos”). HAC subsequently transferred the $600,000 in City CDBG funds to Hotel San Carlos, L.P., a partnership between Excel Group and Achieve Human Services, Inc. (collectively “Achieve”). HAC’s transfer of the City CDBG funds to Achieve was secured by a promissory note and deed of trust on the San Carlos property and HAC then assigned its rights and interest in the $600,000 promissory note and deed of trust to the City to secure the City’s loan. Achieve then took over the San Carlos low-income housing project.
In 1997, Achieve obtained additional funding for the project through federal and State of Arizona Low-Income Housing Tax Credit (“LIHTC”) financing. This was in addition to the original $600,000 CDBG through the City. To obtain the LIHTC funding, Achieve had to seek City Council approval to subordinate the CDBG deed of trust position and allow the State LIHTC to take a higher position and also had to enter into an Affirmative Land Use Restrictive Covenant Agreement (called a “LURA”) to ensure that Achieve would operate the San Carlos as a low-income housing project.
The 1997 City Council authorized and approved a subordination and intercreditor agreement to allow Achieve to obtain the LIHTC funding and the State LURA on the San Carlos was entered into and recorded at Yuma County Recorder Fee#: 1997-24187. After obtaining the LIHTC financing, Achieve (and its parent partner Excel Group) and Bank of America held first and second mortgage positions, both secured by deeds of trust, and the City held third mortgage position for the CDBG funds, also secured by a deed of trust. Achieve eventually satisfied the Bank of America mortgage, leaving City in second position.
Achieve operated the housing project at the San Carlos until 2021, when Achieve began steps to wind up its obligations at the San Carlos and remove the State LURA so the San Carlos could be sold. Achieve began marketing the San Carlos in 2024 and has now entered into a sale agreement with Hotel San Carlos of Yuma, LLC.
Because the sale price does not cover all of the secured mortgages (deeds of trust) on the San Carlos, Achieve requested a compromise. In exchange for the buyer entering into this Development Agreement, and a compromise payment of $300,000 from Achieve to the City of Yuma, the City Council will direct the City Administrator to release the City’s second-position mortgage and deed of trust. City Council supports the buyer’s conceptual intention to redevelop the property as market rate residences, possibly loft-style residences, or redevelop the San Carlos into a hotel with national branding.
Staff has determined that this redevelopment project will result in significant planning, economic, historical, social, and other public benefits to the City and the downtown redevelopment and may qualify under the Government Property Lease Excise Tax abatement incentive if all legislative criteria are met.
Adopting this Resolution approves and authorizes the attached Development Agreement.
FISCAL REQUIREMENTS:
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CITY FUNDS: |
$ 0.00 |
BUDGETED: |
$ 0.00 |
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STATE FUNDS: |
$ 0.00 |
AVAILABLE TO TRANSFER: |
$ 0.00 |
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FEDERAL FUNDS: |
$ 0.00 |
IN CONTINGENCY: |
$ 0.00 |
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OTHER SOURCES: |
$ 0.00 |
FUNDING: ACCOUNT/FUND #/CIP |
TOTAL $ 0.00
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To total; right click number & choose “Update Field” |
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FISCAL IMPACT STATEMENT:
NONE
ADDITIONAL INFORMATION:
SUPPORTING DOCUMENTS NOT ATTACHED TO THE CITY COUNCIL ACTION FORM THAT ARE ON FILE IN THE OFFICE OF THE CITY CLERK:
NONE
IF CITY COUNCIL ACTION INCLUDES A CONTRACT, LEASE OR AGREEMENT, WHO WILL BE RESPONSIBLE FOR ROUTING THE DOCUMENT FOR SIGNATURE AFTER CITY COUNCIL APPROVAL?
☐ Department
☒ City Clerk’s Office
☐ Document to be recorded
☐ Document to be codified
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Acting City Administrator: |
Date: |
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John D. Simonton |
04/28/2025 |
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Reviewed by City Attorney: |
Date: |
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Richard W. Files |
04/25/2025 |