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HomeMy WebLinkAboutMINUTES - 10282014 - C.34RECOMMENDATION(S): APPROVE and AUTHORIZE the Conservation and Development Department Interim Director, or designee, to accept the terms of, and execute, the State Department of Housing and Community Development Subordination Agreement and Estoppel Certificate for the Lafayette Senior housing (Lafayette), and the Berrellesa Palms Senior housing (Martinez) projects. FISCAL IMPACT: No General Fund impact. The Subordination Agreement will result in the County loans of federal HOME and CDBG funds being in a junior lien position to the State HCD loan. BACKGROUND: On December 10, 2008, the County loaned $1,400,000 in Community Development Block Grant (CDBG) funds to Eden Housing Inc. to acquire the site for the Lafayette Senior project. On August 1, 2012, the County loaned $1,605,000 in HOME Investment Partnerships Act (HOME) funds to Lafayette Senior L.P for the construction of the project. In 2010, the County loaned Resources for Community Development (RCD) $650,000 in HOME funds and $1,525,000 in CDBG to pay for predevelopment costs and to acquire the site for the Berrellesa Palms project in Martinez. On December 1, 2012, the County loaned an additional $2,300,000 in HOME funds and $300,000 in Housing Opportunities for Persons with HIV/AIDs funds for the construction of the development. APPROVE OTHER RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE Action of Board On: 10/28/2014 APPROVED AS RECOMMENDED OTHER Clerks Notes: VOTE OF SUPERVISORS AYE:John Gioia, District I Supervisor Candace Andersen, District II Supervisor Mary N. Piepho, District III Supervisor Karen Mitchoff, District IV Supervisor Federal D. Glover, District V Supervisor Contact: Kara Douglas, 4-7880 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: October 28, 2014 David Twa, County Administrator and Clerk of the Board of Supervisors By: Chris Heck, Deputy cc: C. 34 To:Board of Supervisors From:John Kopchik, Interim Director, Conservation & Development Department Date:October 28, 2014 Contra Costa County Subject:Approval of the State Department of Housing and Community Development Subordination Agreement and Estoppel Certificate BACKGROUND: (CONT'D) Both projects are complete and fully occupied. Lafayette Senior provides 46 units of affordable housing for seniors. Berrellessa Palms provides 48 units of affordable housing for seniors. The State Department of Housing and Community Development (HCD) is loaning $4,572,660 to Lafayette Senior L.P. to pay off a portion of a private construction loan. HCD is loaning approximately $6,000,000 to Berrellesa Palms L.P. to pay off the private construction loan. HCD is now preparing to fund the loan and requires the County CDBG and HOME loans to be in a junior lien position. Both the CDBG and HOME loan agreements allow the County CDBG and HOME loans to be placed in a junior lien position, as long as certain conditions are met. One condition is that the senior lender provide a notice and cure period to the County of at least 60 days. HCD uses a form of subordination agreement that provides the junior lender with a 30-day notice and cure period. The agreement provides that the cure period may be extended if HCD determines 30 days is insufficient. Staff recommends the Board of Supervisors authorize the Department of Conservation and Development Interim Director, or designee, to execute the HCD subordination agreement with a 30-day notice and cure period. Pursuant to federal regulations, the County may loan or grant CDBG and HOME funds for affordable housing development. The County provides these funds as loans rather than grants for two reasons: (1) The County may receive small annual loan payments when properties have excess cash flow after operating expenses and bank mortgage payments, and (2) If the owner defaults on any of its obligations, the County will be a party to the negotiations and will have an opportunity to preserve its affordable housing. CONSEQUENCE OF NEGATIVE ACTION: If the County does not agree to the 30-day notice and cure period, HCD will not provide permanent financing for the projects and Lafayette Senior L.P. and Berrellesa Palms L.P. will not be able to convert the construction financing to permanent financing. CHILDREN'S IMPACT STATEMENT: Not applicable.