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HomeMy WebLinkAboutMINUTES - 07172001 - C.143 TO: BOARD OF SUPERVISORS Contra Costa FROM: Dennis M. Barry, AICP . o � Community Development Director Jj:rq;`('�V �r Count y DATE: July 17, 2001 SUBJECT: Construction Financing—Grayson Creek Affordable Housing Project in Pleasant Hill SPECIFIC REQUEST(S) OR RECOMMENDATIONS(S) & BACKGROUND AND JUSTIFICATION RECOMMENDATIONS (1) APPROVE the allocation of up to $3 million in County Community Development Block-Grant (CDBG)funds to provide a short-term construction loanto BRIDGE Grayson Creek Associates for the Grayson Creek Affordable Housing Project subject to conditions specified in this Board Order. (2) AUTHORIZE the Deputy Director,Redevelopment or his designee to enter into legal documents for this purpose. FISCAL IMPACT No General Fund impact. The proposed construction loan will be from unexpended balances in the County's CDBG line of credit with the federal government. The loan will be repaid from the project's permanent financing. No previously programmed use of CDBG funds will be impaired. BACKGROUND/REASONS FOR RECOMMENDATIONS On July 28, 1998,the Board of Supervisors approved the allocation of$1.1 million in CDBG funds and the transfer of a County-owned site valued at$650,000 to BRIDGE Housing Corporation to develop the CONTINUED ON ATTACHMENT: X YES SIGNATURE: _✓RECOMMENDATION OF COUNTY ADM:INISTRATO RECOMDATION OF BOARD COMMITTEE ✓ APPROVE OTHER SIGNATURE(S): ACTION OF BO ON l;i ��APPROVED AS RECOMMENDED OTHER_ VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A �G UNANIMOUS (ABSENT TRUE AND CORRECT COPY OF AN AYES: NOES: ACTION TAKEN AND ENTERED ON THE ABSENT: ABSTAIN: MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE SHOWN. Contact: Kathleen K. Hamm (925) 335-1257 ATTESTED Orig/cc: Community Development Dept. John SweeLen CLERK OF cc: County Administrator THE BOARD OF SUPERVISORS County Counsel AND COUNTY ADMINISTRATOR BRIDGE Housing Via CDD BY DEPUTY Grayson Creek Apartment Project.On June 13,2000,as a result of changes in the project financing plan and increased construction costs, the Board approved an additional $825,000 in CDBG funds to this project, bringing the County's total financial commitment to $2,575,000. The purpose of the Grayson Project is to increase the supply of multifamily rental housing affordable to and occupied by extremely-low and very-low income households in Central County through the new construction of 70 apartments on a currently vacant site located at 100 Chilpancingo Parkway in Pleasant Hill. The apartments will include one, two and three-bedroom units to serve a variety of household types, including individuals, senior citizens,households with children and disabled persons. All units will be required to remain affordable to the target population for a minimum of 55 years. Following approval of the original financing in 1998, BRIDGE purchased the project site using a combination of County CDBG and other resources. Since that date, the Community Development Department has been working with BRIDGE and the City of Pleasant Hill to complete the financing required to successfully complete this project in a manner which minimizes additional permanent public subsidy requirements. With this objective in mind, BRIDGE has requested that the County provide a zero-interest construction loan for the project in the amount of$3 million,resulting in net cost savings of approximately $250,000. The construction loan will be provided from unexpended balances in the County's CDBG line of credit with the federal government. The requested amount is achievable based on the current fund availability and historic balances maintained in the CDBG line of credit. The loan will be secured by an irrevocable line of credit from a private lender for the full amount of the loan payable to the County on demand. Repayment of the loan will be within approximately 18 months upon syndication of the project's low-income housing tax credits (LIHTCs) and closing of the permanent financing. An additional construction loan will be provided to the project by a private lender (Union Bank). The proposed CDBG construction loan for the Grayson Project is similar in structure to a construction loan of$3 million in CDBG funds previously provided to BRIDGE in connection with the recently completed Coggins Square Apartment Project in the Pleasant Hill BART Station Area. The Coggins Square Loan was fully repaid to the County as required following project completion. The total cost of the Grayson Creek Apartment Project is $18.3 million. All other financing needed to complete this project including repayment of the County construction loan is approved. Permanent financing sources include all of the following: California Housing Finance Agency bond financing $ 5,700,000 County CDBG funds (permanent financing) $ 2,575,000 City of Pleasant Hill Redevelopment Agency (RDA) $ 770,000 Federal Home Loan Bank Affordable Housing Program $ 284,000 Low-income Housing Tax Credits $ 4,283,262 State Multifamily Housing Program $ 4,074,510 Developer equity contribution $ 600,000 Deferred developer fee $ 50,000 TOTAL $18,336,772 In addition to the above financing, the City of Pleasant Hill RDA approved an annual payment of $235,000 in RDA tax increment funds to support project operating costs and debt service payments over a 26 year period. As previously stated,BRIDGE currently owns the Grayson Creek Apartment site. Prior to execution of the construction loans,BRIDGE will transfer ownership and development responsibility for the project to BRI DGE Grayson Creek Associates,a limited partnership formed for purposes of LIHTC syndication and project financing. BRIDGE is the managing general partner of the Partnership and,as such,remains fully responsible for successful completion of the project. The construction loan would be to the Partnership as the current developer/owner. The recommendation for approval of the$3 million CDBG construction loan is subject to the following conditions: (1) Provision of an irrevocable letter of credit from an accredited financial institution in a form approved by the County for the full amount of the construction loan payable upon County demand. (2) Compliance with all relevant federal regulations for the CDBG Program,including qualification of BRIDGE Housing Corporation as a Community Based Development Organization(CBDO). Federal regulations limit the use of CDBG funds for new construction of housing to qualified CBDOs.