AgdaPkt 2015-11-09 Closed and Joint SA PFA

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Page 2 of 4 Current Status of Loan The existing MCA Note is due and payable in full on January 17, 2028. Annual payments of principal and interest are due on May 1 of each year, which began in the year following receipt of certificate of occupancy, payable exclusively from residual receipts of the Project for the preceding calendar year. The loan bears simple interest at the rate of three percent (3%) per year. The current principal balance of the MCA Note is $1,445,000 and the accrued interest as of June 30, 2015 is $467,641 for a total outstanding balance of $1,912,641. Of this total amount, the RDA General portion is $1,073,924 in principal and $347,551 in accrued interest for a total of $1,421,475. The loan terms state the Note may not be prepaid in whole or in part without prior consent of the Payee. The Note states that any transfer of the Site within fifteen (15) years of the Certificate or Completion of the Project without the consent of the Payee or as otherwise permitted under the DDA or the Deed of Trust shall result in the Payee’s imposition of a prepayment penalty in the amount of twenty percent (20%) of the original principal amount of the Note. The Certificate of Completion was recorded on June 28, 1996 therefore the 15 year penalty period terminated on June 28, 2011 and the prepayment penalty on acceleration of the Note is no longer applicable. The JHR Note was due and payable in full on January 1, 2028; however it was prepaid in full in April 2012. ANALYSIS MCA is requesting approval from the City as the Housing Successor Agency to prepay the existing the General Portion of the Loan and all accrued and unpaid interest on the entire Loan, and an extension to the loan term for the Low Mod portion of the Note. MCA’s primary purpose of the prepayment request is to resyndicate/refinance the Project in order to generate funds necessary to complete capital repairs to the buildings to preserve the existing affordable housing, repay a $1.46 million dollar loan from its affiliate and to pay off the existing senior lender. MidPen identified capital repairs necessary to preserve and maintain the property including substantial dry rot repair to the buildings structural framing, exterior stucco replacement, exterior painting, various building envelope waterproofing and several other essential items. Based on the scope of work MidPen estimates the total hard costs will be $4.3 million dollars. These repairs are critical to the long term preservation of this existing affordable housing. In addition to the repairs MidPen will be able to improve operating expenses by installing higher efficiency appliances, lighting fixtures and a photovoltaic system. They will be able to improve environmental sustainability by installing more efficient drip irrigation systems. Ultimately the investment in these improvements will ensure the long term affordability and sustainability of these units and will improve residents’ quality of life. MCA intends to submit a new Tax Credit program application on or about November 11, 2015 to re-syndicate/refinance the Project to generate tax credit equity. In order to favorably position the Project to facilitate a successful resyndication they need to reduce or eliminate existing debt or need existing lien holders to subordinate to new mortgage financing and modified loan terms, resulting in an extension of existing loan maturity dates. To accomplish 6.3.A. - Page 2