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HomeMy WebLinkAboutMINUTES - 12201983 - X.6 (TO: BOARD OF S ERVISORS PROM: Anthony A. Dehaesus Contra Director of Planning Costa r*DATE: December 16, 1983 County SUBJECT: Community Development Block Grant Loan Assistance to the Muir California Senior Housing Development SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION RECOMMENDATIONS 1. Approve the recommendation of the Housing and Community Development Advisory Committee as follows: a) 1983-84 Community Development Block Grant Contingency Funds in an amount not to exceed $162,500 be provided to assist in the rehabilitation of the Muir California Senior Housing Project; said amount to be matched by the County Housing Authority on a 50-50 basis. b) Assistance be provided in the form . of a loan to Goldrich, Kest be Associates; said loan to be secured by a second deed of trust on the property; loan assistance should generally be in the form of a 15 year amortizing loan with an interest rate of 5.75%. c) Authorize staff to pursue various financing options which could result in reducing the amount of gap financing. BACKGROUND On Wednesday, December 14, 1983 the Housing and Community Development Advisory Committee met and considered a request for financial assistance from Goldrich, Kest and Associates, a private developer, to complete the acquisition/rehabilitation of the Muir California Senior Housing Project in Martinez. Background on the request and analysis of the proposal is attached. The action recommended by the Housing and Community Development Advisory Committee parallels the recommendation of the Housing Authority Advisory Commission and approved by the Housing Authority Board. CONTINUED ON ATTACHMENT:_YES SIGNATURE: 1 _ RECOMMENDATION OF COUNTY ADMINISTRATOR R O END TION O ARD COMMI EE X APPROVE OTHER SIGNATURE(S) 'j/ '?zJ""" -C ACTION OF BOARD ON LYd3APPROVED AS RECOMMENDED OTHER C VOTE OF SUPERVISORS 1, UNANIMOUS (ABSENT ) 1 HEREBY CERTIFY THAT THIS IS A TRUE AYES: NOES: AND CORRECT COPY OF AN ACTION TAKEN ABSENT:. ABSTAIN: AND ENTERED ON THE MINUTES OF THE BOARD OF SUPERVISORCA ON THE DATE SHOWN. ,Q CC: Planning Director ATTESTED V County Administrator Auditor-Controller J.R. OLSSON, COUNTY CLERK Contractor via Planning AND EX OFFICIO CLERK OF THE BOARD Housing Authority 44 S Ll M882/7-e3 BY � -l� DEPUTY CONTRA COSTA COUNTY PLANNING DEPARTMENT i TO: Housing and Community Development DATE: DEC 91983 Advisory Committee FROM: Dennis Fransen, Chief SUBJECT: Goldrich, Kest & Associates Housing and Community elopment Request for CDBG Financial Assistance for Muir California I. BACKGROUND Goldrich, Kest & Associates, a private developer, has entered into a contingent agreement to purchase the Muir California Senior Housing Project (Martinez) from the Bank of America. The developer proposed to use a commitment of Section 8 Moderate Rehabilitation Rent Subsidy Assistance Program currently in the hands of the Housing Authority to assure affordable rents and occupancy by low income seniors for a minimum 15 year period. The developer has also indicated this good faith intent to provide affordable rents beyond the 15 year period subject to available subsidy programs. The predominant amount of the permanent financing will be provided by the California Housing Finance Agency. The developer proposes to provide approximately $308,000 in equity towards the project and is requesting $325,000 in CDBG loan assistance. Additional background is provided in Attachment 3. H. ANALYSIS In the continuing dialogue regarding this proposal between staff and the various interested parties it has been indicated that any finanicial assistance would have to be provided as a loan, that various creative financing options be open for consideration, and that the Housing Authority provide matching funds. In addition, concerns were expressed relative to the project acquisition price, rehabilitation costs, and equity contribution of Goldrich, Kest and Associates. 1. Structure of Financial Assistance: The developer indicates that the provision of the financial assistance in the form of a loan is acceptable. A 15 year loan of 5.75% would provide the County with a return approximately equal to a moderate rate of inflation. Structuring the terms of the gap financing could include some "creative financing" techniques which could have the effect of reducing the amount of funds necessary. Two techniques being evaluated are use of the CD "Float", and the use of an interest subsidy loan. The CD Float involves borrowing programmed but unspent CDBG letter of credit authority in order to provide a short term construction financing note. The short term note would be backed up by an irrevocable letter of credit assuring repayment by a date certain, therefore the risk is low. The short term "Float" loan (less than six months) being discussed would be at a zero interest rate and could have the effect of reducing gap financing by $65,000. The primary constraint is whether the amount of unused letter of credit authority available to the County will be sufficient throughout the proposed term of the.note to allow it to be originated. 447 i HCDAC page two December 9, 1983 The additional.technique being considered is through the use of an interest subsidy payment. This technique, modeled after the most popular housing rehabilitation subsidy technique, would result in a bank making the gap loan, and the County funds would be used to make an up-front interest subsidy payment to the private lender so that the rate to the borrower is at the desired rate. For example, by making an up-front subsidy payment of around $135,000 the County could facilitate the provision of a $325,000 bank loan at 5.75%. The weakness with this approach is that the County subsidy payment does not recycle, i.e., the County is not repaid the amount. 2. Matching Funds: The Executive Director of the Housing Authority has rec- ommended to the Housing Authority Advisory Commission that it share, on a 50-50 match basis, in any gap financial assistance to be provided (Attachment 2). The Advisory Housing Commission will be considering this recommendation at its December 12 meeting; results of their deliberation will be known prior to the HCDAC considering action. 3. Project Acquisition Costs: Earlier proposals showed the acquisition costs at $2.9 million. This included "buying" $600,000 in unused proceeds remaining from the prior bond issue. The current proposal sets acquisition at $1.9 million, the amount Bank of America purchased the development at from the bondholders, and does not ' include the $600,000 in unused bond proceeds. 4. Rehabilitation Costs: The costs of rehabilitating the project are substantial - $1.27 million. These costs have been reviewed and verified by the County Housing Authority and the California Housing Finance Agency. Further, a review of the need for rehabilitation items proposed to be done has been completed. 5. Goldrich do Kest Equity Contribution: The amount of equity to be provided by Goldrich & Kest is proposed at $307,868 - substantialy up from prior proposals which called for only $150,000 in equity. The latest proposal brings the developers contribution into substantial parity with the requested public gap financing. It should be noted that the developer anticipates no positive cash flow on the projects. Returns to the developer will occur in the form of tax considerations, and ultimately -' equity appreciation. III. STAFF RECOMMENDATION The Muir California project has lived a painful existence up to now. Through a public/private partnership involving HUD, CHFA, the County and the developer the means for completing this project are imminent. To not provide the gap financing would result in a financial transaction not acceptable to the developer. Completion of the project would be further delayed resulting in further deterioration. In addition the 100 units of Section 8 Moderate Rehabilitation Rent Subsidy Certificates could be recaptured. Staff, therefore, recommends the following: I. That CDBG funds in an amount not to exceed $162,500 be provided for the Muir California Senior Housing Project; the remaining $162,500 in gap financing would be provided by the Housing Authority. t= 4 48 3 HCDAC page three December 9, 1983 2. The financing would be provided in the form of a 5.75%, 15 year amortized loan, secured by a second deed of trust on the property. 3. That staff be authorized to pursue various creative financing options which could result in reducing the amount of gap financing necessary. DF/mbM attachments 419 GOLDRICH, KEST & ASSOCIATES BUILDERS AND DEVELOPERS COUNT1 � _ _ wr PARTNERS -' ' = 15233 VENTURA BOULEVARD,SUITE 816 JONA OOLDRICHGHERM DEC3 7 1 AN OAKS,CALIFORNIA 01403 SOL KEST r UL59 P11 :!3 IA -872-1741 ROBERT HIRSCH December 7, 1983 VIA FEDERAL EXPRESS Board of Supervisors County of Contra Costa County Administration Building 651 Pine Street Martinez, California 94553 Attn. Mr. Jim Kennedy Re: Martinez, California 100 Units Senior Citizen Housing Dear Members of the Board: For a variety of reasons which need not be enumerated in wthis letter, the above project failed. It has been at a standstill about 75% complete for a year awaiting a workout. ' It became a stubborn problem that would not go away. With your help and support, we can bring the project to- -its feet so that it will serve the badly needed housing needs of low and moderate income senior citizens. To the end of acquiring .the project from the Bank of America, acting as a trustee for the bondholders who provided the financing for the project, we have been working with the Bank for over six months. We have finally negotiated and executed a Purchase and Sale Agreement, a copy of which is enclosed. We have also been fortunate to obtain a 15-year commitment for rental assistance for all 100 units from the Department of Housing and Urban Development, under its Moderate Reha- bilitation Section 8 Program. This commitment will assure housing affordable to low and moderate income senior citizens for at least a 15-year period. We applied through the County for mortgage financing from the California Housing Finance Agency and will be receiving a loan of $2,889,000. Commitment fees have already been paid by us to CHFA and CHFA has sold its bonds and, therefore, the loan funds for this project are in place. Our general manager for Northern California construction has: i) inspected the project; ii) interviewed subcontractors; and iii) consulted with local building, fire, engineering and public works officials, and on the basis of the foregoing activities has prepared a detailed cost breakdown estimatinv the cost of completing the project. Board of Supervisors Attention: Mr. Jim Kennedy December 7, 1983 Page Three a rent schedule which will render at least 20% of the project affordable to senior citizens for an additional five-year period. It goes without saying that all 100 units of the project will remain senior citizen housing, whether or not subsidy programs are available after 15 years. We thank you for your consideration and respectfully request your support. Very truly yours, GO RICH, KEST & ASSOCIATES E.G. Aftergut • Director of Development Southern California EGA/lp enc. cc: Perfecto Villarreal, Housing Authority of the County of Contra Costa, Martinez Y1 / , 45 1:' IMPACT OF REVOLING LETTER OF CREDIT FINANCING With Revolving As Per Proforma Letter of Credit Acquisition cost $1,900,000 $1,900,000 Rehabilitation cost 1,270,000 1,270,000 Financing cost 351,868 286, 868 (a) $3,521, 868 $3,456, 868 CHFA funds $2,889,000 $2,889,000 Goldrich & Kest 307, 868 307, 868 County CBDG 325, 000 260, 000 $3, 521, 868 $3,456, 868 ---------- ---------- (a) Savings are attributable to interest free financing from County under its Revolving Letter of Credit for rehabilitation work during four-month period, and for acquisition cost during two month overlap period when project is still undergoing rehabilitation. TJ 3 9. Assignment. Buyer shall not assign any right granted it under this Agreement, or delegate any duty to be performed by it under this Agreement , without the prior written consent of Seller. Buyer may, without being relieved of its obligations hereunder , assign its rights to a limited partnership provided that Buyer , or the partners of Buyer , are the sole general partners of said limited partnership. Subject to the foregoing , this Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties . 10. Casualty and Condemnation. Buyer shall be bound to purchase the Property for the full price as required by the. terms hereof, without regard to the occurrence or effect of any damage to or destruction of the Improvements , provided that: (i ) in the event of a casualty loss , the estimated cost to ' repair any such damage or destruction does not exceed thirty percent (30%) of the purchase price , and that upon the Closing Date Buyer shall be credited against the purchase price due hereunder with insurance proceeds , if any , received as a result of such damage or destruction, and (ii) in the event of a partial condemnation, the Property is not rendered economically infeasible, and that at the Closing Date Buyer shall be credited against the purchase price due hereunder with the amount of any condemnation proceeds collected, or such proceeds shall be assigned to Buyer if not then collected. -7- application of such term or provision shall not be affected thereby. Time is of the essence hereof. The captions of this Agreement are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. This Agreement shall be construed and enforced in accordance with the laws of the State of California. This Agreement may not be amended or modified in any respect whatsoever except by instrument in writing signed by the parties hereto. This instrument constitutes the entire Agreement between the parties with respect to the subject matter hereof. 13. Litigation. Seller has disclosed to Buyer the following pending litigation which may affect the Property: Grinnell Fire Protection Systems Company, Inc. v. Zocchi Company , et al . , Contra Costa County Superior Court No. -239139; A.J . McCosker Construction Company v. Zocchi and Co:, Inc. , Contra Costa County Superior Court No. 239741; Zocchi and Company , *Inc. v . Muir California Health Recreation & Retirement Facility, Inc. et al . , Contra Costa Superior Court No. 240573 ;, Ferguson_& Wollman Consulting Engineers V. Muir California Health , Recreation & Retirement Facility, Inc . , Contra Costa County Superior Court No. 241910; Bank of America NT&SA v. Muir California, Health Recreation & Retirement Facility, Inc . , Contra Costa County Superior Court No. 240102 , (and related cross-action) ; Diablo Valley Plumbing v. Zocchi & Co. , et al_, Contra Costa County Superior Court No. 239567; and Lind v. Muir California Health Recreation and Retirement Facilities, Inc. , 4: HOUSING AUTHORITY. Co.: L of the ;- COUNTY OF CONTRA COSTA 3133 Estudillo Street • P.O. Box 2396 • Martinez, California 94553 7. %►' t:.y' a. : .. Central Administration DATE FOR THE AGENDA OF DECEMBER 12, 1983 (415)372-0791 - Q Construction s Engineering REPORT NO.. 83-176 (SEE November 21, 1983) (415)372.7308 ` Q Fiscal SUBJECT: MUIR CALIFORNIA LOAN REQUEST - Acctg.6 Financial Services (415)372-8134 - Q Housing operations SUMMARY: At the November 21, 1983 Commission meeting, (415)372-7400 the staff presented a recommendation concerning Q New Development loan re uest for Muir California that was a (415)372-0796 q Q Special Projects worded as follows: (415)372-0796 NousingOffices "The Advisory Housing Commission agree to provide Q 2102 Buchanan Road •a loan from Housing Authority reserves on a 50-50 Antioch.CA 94509 (415)754.2565 basis with County CDBG funds in an.amount not to Q 801 ••J"street eexxceeed- $162,500 for the Housing Authority share—to Antioch,CA 94509 uorr tch, Kest for the completion of the Muir (415)757.2925 California project at a negotiated loan rate and Q 2425 Bisso Ln..Suite 225 that the principal and interest b6- repaid over a Conco(415)6 7.8791 52o 15-year period; and the Executive Director be (415)687-8791 y 0 3133 Estudillo Street authorized to complete the loan negotiations P.O.Box 2396 and sign whatever legal papers are necessary to Martinez,-CA 94553 make the loan after a review of the legal documents (415)372.8621 Q ,601 3 Jade street by Housing Authority legal counsel; and to forward No.Richmond.CA 94802 this recommendation for review and approval by the (415)232.8492 Board of Commissioners of the Housing Authority." Q 4th a Rosemary Ln Oakley,CA 94561 After considerable discussion, a motion to approve (415)625.2245 Q 875 El Pueblo Avenue the staff recommendation failed on a two-two vote, Pittsburg,CA 94565 with two abstentions (one Advisory Board member (416)432.3523 was absent). It was then decided that a Special Q2California Street Meeting would be scheduled December 12, 1983 for Rodeo,CA 94572 (415)799.4476 the purpose of further consideration of the Muir Q52Pueblo Avenue California loan request. West Pittsburg,CA 94565 (415)458.3202 This item is also to be considered by the Board of Supervisors in their role as the Housing Authority Board of Commissioners on December 13, 1983. On December 14, 1983 the Housing and Community Development Advisory Committee will also consider this loan request for their share of the loan amount. Without Housing Authority agreement to participate in the Muir loan on a 50-50 matching basis, it is unlikely that the Housing and Community Development Advisory Committee will agree to assist in the Muir project loan. 459 For the Agenda of December 12, 1983 Report No. : 183-176 Page 3 6. Occupancy of the 100 Muir units would occur in May, 1984. - t 7. If a subsidy program is available when the 15-year HUD commitment for the project runs out, Goldrich, Kest will use their best efforts to qualify the project or at least 20% of the project under. such a program. B. If a subsidy program is ~unavailable 'to the project, Goldrich, Kest will use their best efforts to structure a rent schedule which will render at least 20% of the project affordable for an additional five year period. � s 9. Whether or not subsidy programs are available after 15-years, Goldrich, Kest would maintain the 1.00 unit project as a senior citizen housing development._ Also attached to this report is a copy of the Purchase and Sale Agreement Goldrich, Kest executed with the Bank of - America on November 30, 1983. Please note that one of the conditions of the purchase (Item No. 6) is that Goldrich, Kest would receive a loan or grant of $325,000 from the County of.Contra Costa by. December 20, 1983. ` Recommendation: That the Advisory Housing Commission agree to provide a loan from Housing Authority reserves on a 50-50 basis with County CDBG funds in an amount not to exceed $162,500 for the Housing Authority share to Goldrich, Kest .for the completion of the Muir California project at a negotiated loan rate (not less than 5%) and that the principal and interest be repaid over a 15-year period; and the Executive Director be authorized to complete ± the loan negotiations and sign whatever legal papers are necessary to make the loan after a review of the legal documents by Housing Authority legal counsel; and to forward this recommendation for review and approval by the Board of Commissioners of the Housing Authority. << 461 electric, water , gas and other utility expenses incurred in connection with such services prior to the Closing Date; Buyer shall arrange for payment of all such expenses thereafter , including all connection and other expenses related to continuing such services . (d) Each party represents and warrants to the other that it has employed no broker or finder in connection with the transaction contemplated by this Agreement , and agrees to pay any commission or finder' s fee which may be due on account of the transaction contemplated by this Agreement to any broker or finder employed by it and to indemnify and hold harmless the other party from all liability, expenses (including reasonable attorney' s fees) , damages and claims arising from any claim for such commissions or fees. 8 . Notices. Any communication required or permitted to be given or delivered hereunder shall be in writing and be sent by first-class mail , postage prepaid , addressed to the party intended at the address set forth below, or at such other party in the manner aforesaid: If to Seller: Bank of America , NT & SA , as trustee Corporate Agency Division Pk.O. Box 37000 San Francisco, CA 94137 Attention: T. J. Zupfer If to Buyer: Goldrich , Kest & Associates 15233 Ventura Boulevard , Suite 816 Sherman Oaks , CA 91403 Attention: Robert Hirsch 470 -6- J 7. Closing. (a) = The sale of the Property under this Agreement shall be closed no later than February 28 , 1984 , such date being herein called the "Closing Date"; provided , however , that if Seller is enjoined from closing the sale of the Property by order of a court of competent jurisdiction, the Closing Date shall be extended by the number of days that the injunction prohibits Seller from closing the sale of the Property, however in no event shall the Closing Date be extended beyond June 27 , 1984. On or before February 28 , 1984 , the parties shall deposit in escrow with Escrow Holder all documents and moneys necessary to comply with the terms and conditions of this Agreement, together with escrow instructions consistent with this Agreement . If the injunction referred to above continues to be in effect after June 28 , 1984, all documents deposited with the Escrow Holder shall be returned to the parties and the escrow shall be terminated. (b) The real estate transfer tax applicable to the sale of the Property, the premiums applicable to the policy of title insurance referred to in paragraph 6 (a) (2) (ii) , • any escrow fee charged by Escrow Holder , the fee for recording the Grant Deed and all other costs of closing the sale of the Property under this Agreement shall be borne by Buyer . (c) Real property taxes levied against the Property and rents shall be prorated between Seller and Buyer as of the Closing Date. Seller shall arrange for payment of all A69 this condition shall be waived and Buyer shall be bound by all of the terms and conditions of this Agreement. (2) On the Closing Date , Escrow Holder shall be willing to issue to Buyer an ALTA standard form policy of owner ' s title insurance , in the amount of the purchase price , insuring Buyer that title to the Property is vested of record in Buyer , subject to the following: (i) The matters specified in paragraph 5 hereof; and (ii ) The printed exceptions and exclusions contained in the ALTA standard form policy of owner' s title insurance . Issuance of said ALTA policy by Escrow Holder shall be • deemed to be full satisfaction of the condition of 'closing set forth in paragraph 5, above . Reference to any litigation described in paragraph 13 hereof in the Buyer' s policy of title insurance shall not constitute a failure of this condition provided that Escrow Holder provides the necessary endorsements to protect Buyer from any loss resulting from said litigation. (b) Seller's obligation to sell the Property under this Agreement is subject to the following conditions , failure of which unless waived by Seller in writing shall release Seller from all obligations hereunder: (2) The conditions set forth in subparagraphs 6 (a) (1) and (2) have been waived or satisfied by Buyer ; and ��� 468 -4- (a) The title matters referred to as exceptions numbered 1 through 9 , inclusive , on the Preliminary Report; (b) Zoning laws; and (c) Defects which would be disclosed by an inspection or by a survey of the Property. The provisions of this paragraph 5 constitute a condition to Buyer'_s obligation to close and do not constitute a, warranty, representation or covenant of Seller as to the state of title of the Property. 6. Conditions (a) Buyer ' s obligation to purchase the Property under this Agreement is subject to the following conditions ,_ failure of which unless waived by Buyer in writing shall release Buyer from all obligations hereunder: (1) Buyer shall have until December 20, 1983 at 11:59 p.m. to obtain a loan or grant from the County of Contra Costa in the amount of not less than $325,000 . In the event that Buyer does not obtain said grant or loan , and Buyer notifies Seller of its failure to do so on or before December 21 , 1983 at 12:00 noon , this Agreement shall terminate and Buyer shall be relieved of all of its obligations hereunder. If Buyer does not notify Seller of its failure to obtain the grant or loan by December 21 , 1983 at 12:00 noon, rh AGREEMENT OF PURCHASE AND SALE THIS AGREEMENT is .made as of the _;C day of November , 1983, by and between BANK OF AMERICA NT&SA, as trustee , ("Seller" ) , and GOLDRICH, KEST & ASSOCIATES , a general partnership ("Buyer" ) . WITNESSETH: The parties hereto agree as follows: 1. Purchase and Sale. Seller hereby agrees to sell to Buyer , and Buyer hereby agrees to purchase from Seller , for the price and upon the terms and conditions hereinafter set forth- the orththe real property and improvements thereon ("Property" ) situated in the city of Martinez, County of Contra Costa , State of California , described in preliminary title report no. W-486419-RJ ("Preliminary Report" ) issued by Western Title Insurance Company ("Escrow Holder" ) as of September 14 , 1983, attached hereto as Exhibit A. The purchase and sale of the Property shall be consummated through an escrow with Escrow Holder , located at 100 Mission Street , San Francisco, California' 94105, in the manner set forth on the Closing Date defined below. (�t, 466 _ 2. Conveyance of Property. Seller shall convey the Property to Buyer by a grant deed. 3. Purchase Price. The purchase price shall be One Million Nine Hundred Thousand and no/100 Dollars ($1,900,000), cash. 4. Physical Condition. Seller makes no representation or warranty whatsoever as to the physical condition of the Property. Buyer acknowledges that it: (a) has entered into this Agreement upon the basis of its own investigation of the physical condition of the Property, including subsurface conditions; and (b) is acquiring the Property in an "as is"--co ndition on the Closing Date and assumes the risk that adverse physical conditions may not have been revealed by its investigation; (c) has not relied upon statements of Seller , or Seller ' s employees or agents , concerning the physical condition of the Property; and (d) has conducted its own investigation with respect to any conditions or requirements imposed on the property by the City of Martinez. 5. State of Title. Seller ' s conveyance of title to the Property shall be subject only to the following , whether or not referred to in the Grant Deed: _2_ 465 c HCDAC page two November 8, 1983 In addition to the project related matters listed above, it was indicated that any financial assistance provided from CDBG funds would be in the form of a loan, and that the Housing Authority provide some level of matching funds. In addition, staff indicated a desire to pursue creative means of structuring the financial assistance to keep at the lowest level possible the Initial outlay of CDBG and other local funds. The developer and the staff of the Housing Authority have indicated general concurrance with these financing parameters. This information is being provided to the HCDAC in anticipation that a request will be submitted in the near future and require expedient processing. DF/mbMIN f . f ' r r i y CIL. 464 CONTRA COSTA COUNTY PLANNING DEPARTMENT TO: Housing and Community Development DATE: November 8, 1983 Advisory Committee FROM: Dennis Fransen, Chief SUBJECT: Prospects for a Muir California Housing and Community De elopment Request for CDBG Financial Assistance In late August the Bank of America purchased the Muir California housing project for $1.9 million. Bank of America, as Trustee for the bond issue, purchased the project after no bids were received from other private parties. It is the intent of Bank of America to sell the project to a developer who would complete the project. The firm of Goldrick & Kest Associates, a Los Angeles based developer with substantial experience in assisted housing, has entered into a letter of intent to purchase the Muir California development. The intent to purchase was generally contingent upon the securement of a 15-year commitment of Section 8 Moderate Rehabilitation Rental Subsidy Assistance from HUD. The rent subsidy commitment was necessary to generate the values on which Goldrick & Kest could justify a purchase and rehabilitation of the project. Using their contacts in Washington, Goldrick & Kest has secured for the County a commitment of 100 units of Section 8 Moderate Rehabilitation Rent Subsidy Certificates. The rent subsidies have now been provided to the County Housing Authority who have indicated their intent to make them available for use in the Muir project. In addition, Goldrich & Kest has paid commitment fees for and is in line to receive a loan of $2.8 - 2.9 million from the California Housing Finance Agency. The financing will be for both short-term use during the rehabilitation period, and long term permanent financing. Based on their sale of bonds on November 4, CHFA will make the financing available in the range of 115 - 1114%. In preliminary estimates the cost of the rehablitation work necessary was put in the range .of $700,000 - 800,000. Goldrick & Kest has recently submitted a revised estimate of rehabilitation costs of $1,388,955. These estimates are being reviewed for accuracy and appropriateness. In view of the above, Goldrick & Kest approached staff indicating That they saw a shortfall in ovbrali financing of $325,000. Staff indicated that a request for loan financing could be considered subject to the following items being resolved: 1) The acquisition price of the project being set at an appropriate level; , 2) Verification of the costs and need for rehabilitation work specified; 3) Acceptable presentation regarding the low level of equity being provided by Goldrick & Kest; �. 4,63