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HomeMy WebLinkAboutMINUTES - 09202011 - C.62PDF Return C.62 To:Board of Supervisors From:Catherine Kutsuris, Conservation & Development Director Date:September 20, 2011 Contra Costa County Subject:APPROVAL OF COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS LOAN DOCUMENTS FOR PINOLE GROVE SENIOR APARTMENTS IN PINOLE APPROVE OTHER RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE Action of Board On: 09/20/2011 APPROVED AS RECOMMENDED OTHER Clerks Notes: VOTE OF SUPERVISORS AYE:John Gioia, District I Supervisor Gayle B. Uilkema, District II Supervisor Mary N. Piepho, District III Supervisor Karen Mitchoff, District IV Supervisor Federal D. Glover, District V Supervisor Contact:Kara Douglas 335-7223 I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown. ATTESTED: September 20, 2011 David Twa, BY:June McHuen , Deputy RECOMMENDATION(S): 1. APPROVE and AUTHORIZE the Conservation and Development Director, or designee, to execute required legal documents to modify the existing Community Development Block Grant (CDBG) and HOME Investment Partnerships Act (HOME) legal documents related to the Pinole Grove senior apartments; and 2. APPROVE and AUTHORIZE the Conservation and Development Director, or designee, to execute required legal documents to provide an additional $700,000 in CDBG funds to John Street Housing Associates, L.P., for the Pinole Grove senior apartments in Pinole. RECOMMENDATION(S): (CONT'D) 3. FIND that the project is exempt from the California Environmental Quality Act [Section 15061(b)(3)]; and 4. DIRECT the Conservation and Development Director, or designee, to file a Notice of Exemption for this project with the County Clerk; and 5. DIRECT the DCD Director, or designee, to arrange for payment of the $50 handling fee to the County Clerk for filing such Notice of Exemption. FISCAL IMPACT: No General Fund impact. CDBG funds are provided to the County on a formula allocation basis through the U.S. Department of Housing and Urban Development (HUD). CFDA# 14.218 BACKGROUND: Pinole Grove Senior Housing, located at 800 John Street in Pinole, is a 70-unit senior housing development. The development includes 36 units affordable to seniors with incomes at or below 50% of the area median income, and 33 units affordable to seniors with incomes between 50% and 60% of the area median income. On October 14, 1993, BRIDGE Housing Corporation, a California limited partnership (Initial Borrower) executed a Promissory Note (Note) through which it promised to pay the County $200,000 in CDBG funds and $200,000 in HOME funds. This loan was provided with a three percent interest rate and a thirty year term. The purpose of the loan was support the development of Pinole Grove apartments. Pinole Grove was also funded with Low Income Housing Tax Credits (LIHTC). LIHTC were provided to the Initial Borrower as an equity investment from the partnership’s limited partner. The term of the partnership was for 15 years. At the end of 15 years, the limited partner received all of its tax credit benefits and exited the partnership. BRIDGE Housing now wishes to sell the property to a new limited partnership and rehabilitate the buildings. The ownership entity will be John Street Housing Associates, L.P., a California limited partnership with Hercules Senior Housing, Inc. serving as managing general partner. Hercules Senior Housing, Inc. is wholly owned by BRIDGE Housing Corporation, a local non-profit housing developer that successfully manages several affordable housing projects in Contra Costa County. The rehabilitation will include roof repairs, new window installation, installation of energy efficient upgrades (solar, heating and HVAC, lighting and water), interior upgrades (carpet, cabinetry, and appliances), and landscaping. The City of Pinole supports the project. On March 1, 2011 the Board of Supervisors adopted an Inducement Resolution (a nonbinding conditional statement of intent to issue multi-family bonds) for the project as required by tax law. The Inducement Resolution authorized the submittal of an application by the County for Private Activity Bond Authority. On July 20, 2011 the California Debt Limit Allocation Committee awarded the County authority to issue bonds in the amount of $4.8 million. In order to make this project feasible, the Borrower is requesting that the County refinance its Note with the BRIDGE Housing through a transfer of the debt from the original partnership to the new partnership. This sentence would be better if all the names were specified. -VRM The borrower is also requesting that the County forgive the accrued interest and reduce the interest rate from four percent to three percent. In exchange for this action, the borrower will provide a new 55 year term of affordability. CDBG funds will be loaned at a three percent interest rate for 55 years. Due to limited revenue from the restricted rents, the total amount of the financing provided to the project will likely exceed the value of the completed project. Even though the expected tax credit equity investment is substantial compared to the amount of long term debt, the partnership agreement has numerous safe guards of the investors equity. These safe guards essentially subordinate the County’s debt to the investor’s equity. Therefore, the County funds may not be fully secured through the value of the property. The CDBG legal documents (Loan Documents) are attached and include the following documents: • Modification Agreement • Omnibus Assignment, Assumption, And Consent Agreement • CDBG Loan Agreement • Promissory Note • Regulatory Agreement • Deed of Trust This recommended action includes authorization to execute any and all documents and to take any and all actions necessary to implement the activities authorized under the Loan Documents, including execution of loan amendments or modifications for the purposes of agreeing to reasonable extensions of time deadlines, and estoppel certificates concerning the status of the loan and the existence of Borrower defaults under the Loan Documents. CEQA Determination This activity is exempt from CEQA pursuant to 14 CCR 15061(b)(3). CONSEQUENCE OF NEGATIVE ACTION: Negative action would prevent the restructuring of existing debt and a new CDBG loan to refinance and rehabilitate Pinole Grove Senior Housing, a 70-unit affordable senior housing development, located at 800 John Street in Pinole. Rehabilitation of the development would require alternative financing. CHILDREN'S IMPACT STATEMENT: N/A AgendaQuick©2005 - 2021 Destiny Software Inc., All Rights Reserved