AgdaPkt 2017-06-12 Joint SA PFA - Laserfiche WebLink

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ANALYSIS MidPen is now proposing to transfer ownership of the Property to LifeMoves. MidPen would sell the property to LifeMoves for $1 with a “Right to Repurchase” option. The County would also have the “Right to Purchase” under similar terms if MidPen declines to exercise their first right. Both LifeMoves and MidPen would then collaborate on restructuring the debt on the property as part of a recapitalization effort that will allow LifeMoves to secure other funds in order to rehabilitate the property. The transitional housing facility on the Property has been serving the community for the past 30 years; the transfer of ownership and the debt restructuring would allow the facility to continue serving the community for many more years. LifeMoves pays Belle Haven a fee (rent) of $805 per month, or $9,660 annually, to cover property taxes and insurance. MidPen is requesting forgiveness of loans totaling $615,900 in order to take two primary steps to affect the transfer: obtain forgiveness on all existing debt and regulatory restrictions on the property; and, transfer the fee interest in the property to LifeMoves, subject to a new Redwood City Affordability Agreement and MidPen and the County retaining a right to repurchase. The program participants do not pay rent while completing the program. Because the project targets “deep” affordability levels, the project has a negative net operating income and is thus precluded in its ability to leverage private debt to perform cyclical maintenance and the typical capital expenditures needed for proper long-term stewardship. In order to ensure that LifeMoves will comply with its covenant to provide affordable, transitional housing to very low income populations after forgiveness of the loans, LifeMoves and the City will enter into an Affordability Agreement with the City. LifeMoves’s obligations under this Affordability Agreement will be secured by a deed of trust to be recorded against the property. Forgiveness of the loans, the transfer of the property from MidPen to LifeMoves and effectiveness of the Affordability Agreement and other related agreements will happen simultaneously at a closing to be facilitated by an escrow agent. The original CDBG loan of $560,900 matured on December 19, 2016 and repayment is immediately due and payable upon demand or in the event the Property ceases to operate as transitional housing. The additional CDBG loan of $55,000 matures in 2018. The City Council is being asked to authorize forgiveness of the existing portion of City CDBG loans in the amount of $452,000 and $55,000. The San Mateo County Board of Supervisors approved forgiveness of their outstanding portion of the joint CDBG loan on December 6, 2016 in order to help facilitate the transfer of the Property to LifeMoves. These loans carry a 0% interest rate, a loan term consistent with properties that are not in a position to take on or repay debt. Debt restructuring on the property means that both the City and County may extend recorded regulatory use restrictions on the Property. Since LifeMoves is committed to the continued operation and use of the Property as a transitional housing facility, they would accept such extended obligations and would agree to the continuation of the existing use restrictions for another 20 years. 6.3.B. - Page 3