HomeMy WebLinkAboutMINUTES - 08111998 - C117 Contra
TO: REDEVELOPMENT AGENCY ' '"' ; Costa
FROM: Phil Batchelor Coin
Executive Director
DATE: August 11, 1998
SUBJECT: Parkway Estates Housing Project Loan Guarantee-North Richmond
SPECIFIC REQUEST(S) OR RECOMMENDATIONS( ) & BACKGROUND AND JUSTIFICATION
COMNEMAT QNS
APPROVE and AUTHORIZE the Deputy Director-Redevelopment to executea Loan Guarantee with
the County Housing Authority for an affordable housing project in the North Richmond Redevelopment
Project Area.
FISCAL MACT
No impact on the General Fund. The loan guarantee amount is $350,000, plus accrued interest of 4°x'0,
and would be secured by the housing set-aside portion of tax increments and, if necessary, the
Affordable Housing Trust Fund. This appropriation will be provided for in a future adopted budget of
the Agency should payment be deemed necessary.
BACKGROUND/REASONS FOR R.ECONSENDATIQN
A major goal of the North Richmond Redevelopment Plan is to improve and expand the supply of
affordable housing in the Project Area. The Parkway Estates project is a first crucial step in achieving
this goal and revitalizing the residential area of the community. The North Richmond Municipal
Advisory Council has been a strong supporter of and has allocated redevelopment tax increment funds
to this project for the past four years.
CONTINUED ON ATTACHMENT: YES SIGNATURE: ill,
`�...�
RECOMMENDATION OF EXECUTIVE DIRECTOR COMMS ATION OF AG CY
COMMITTEE
APPROVE OTHER
SIGNATURE( ):
ACTION OF
AGENCY ON AgJst 11, 1998 APPROVED AS RECOMMENDED X OTHER
VOTE OF COMMISSIONERS
I HEREBY CERTIFY THAT THIS IS A
X UNANIMOUS (ABSENT ) TRUE AND CORRECT COPY OF AN
AYES: NOES: _ ACTION TAKEN AND ENTERED ON THE
ABSENT: ABSTAIN: MINUTES OF THE REDEVELOPMENT
AGENCY ON THE DATE SHOWN.
Contact: Beth Lee
335-1256 ATTESTEDr
orifi: Redevelopment Agency PHIL RfATCHELdR,
cc: Community Development AGENCY SECRETARY
Redevelopment Agency
Auditor-Controller
via Redevelopment
OCHI
CHDC BY� .�� DEPUTY
Housing Authority
Community Housing Development Corporation (CHDC) of North Richmond and Oakland
Community Housing Inc. (OCHI) are nonprofit housing development corporations interested in
constructing quality for-sale single family homes in the North Richmond Redevelopment Project
Area. They have identified a parcel at 217 W. Gertrude Avenue as an appropriate site. They will
construct 87 for-sale single family homes on the approximate 10 acre site.
CHDC and OCHI are leveraging the Redevelopment allocation with funds from a variety of sources.
They have applied for, and received, funding from the Community Development Block Grant
(CDBG) and HOME Investment Partnership programs. They have also secured funds from the
Federal Horne Loan Bank Affordable Housing Program and have identified a financial institution for
the construction financing. They have also requested, and received, funds from the City of Richmond
to pay for project-related improvements(i.e., the sound wall and Gertrude Avenue)located within
the City's boundaries. They are working with several lenders to provide favorable permanent
financing under their Community Reinvestment Act programs.
CHDC and OCHI are finalizing the plans for the development. Current project proforma indicate a
cash flaw problem of around $350,000 in the early phases of construction. The financial analysis also
indicates repayment in full of the gap by the last phase of the development. Gap financing must be
secured in order for the project to enter into a construction contract, construction loan agreement,
and ultimately develop the project.
The Agency approached the County Housing Authority to assist in resolving the gap financing
problem in a timely manner. The Housing Authority has stated their desire to assist the Agency and
the development of the Parkway Estates Project by providing the gap financing. The Housing
Authority has agreed to provide a gap financing loan to facilitate the Parkway Estates project. The
Housing Authority has indicated that they would provide a loan for up to $.350,000 and have asked
the Agency to provide a loan guarantee to secure their financial interests. Their loan terms would
require repayment of the outstanding loan amount with accrued interest in five(5)years. The interest
rate will be four percent(4%). The Agency is accepting of the terms and conditions being requested
by the Housing Authority,
The Housing Authority loan will be repaid by the developers on a prorata basis as individual homes
are sold. The proforma shows the entire loan amount being repaid by the sale of the last home and
potentially fully repaid with the sale of the first 47 units. In any event, however, the Housing
Authority loan will be fully repaid by the Agency five years from the release of funds.
Staff analyses indicate that the potential benefits to the Project Area from the project are significant:
1. The construction of new affordable housing will assist the Agency/County in meeting
its affordable housing requirements;
2. Providing affordable for-sale single family homes will further stabilize the North
Richmond community; and
3. CHDC and OCHI will also enter into an agreement to hire North Richmond residents
for new jobs created during construction.
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