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The approval of funding for this project furthers the City’s goals to preserve existing <br />affordable housing including workforce housing, produces additional affordable housing <br />units for extremely low and very low income households, improves the condition of <br />affordable housing and prevents displacement of 7 existing Redwood City households <br />and a small local business. <br /> <br />ANALYSIS <br />The recommended loan terms for the $1,577,750 is a 3% simple interest, 55 year, <br />residual receipts loan. Annual loan payments shall be due and payable on a residual <br />receipts basis in accordance with the formula set forth in the funding agreement and <br />promissory note. In connection with the loan, the City will subordinate its loan to a loan <br />made by Boston Private Bank which is necessary for the project financing. The loan <br />documents include a declaration of affordability covenants, promissory note and deed of <br />trust that will be executed and recorded on title at the close of escrow. The declaration <br />of affordability covenants requires the units to remain affordable to very low and low <br />income households for 55 years. The documents also include an Intercreditor <br />Agreement with the County of San Mateo, which establishes that the City and County <br />Deeds of Trust on the property will be equal in lien priority. HHDC is scheduled to close <br />escrow to complete this property acquisition by June 29, 2017. <br /> <br />ALTERNATIVES <br />The City could recommend alternative loan terms, however such action could potentially <br />jeopardize the project due to the terms of HHDC’s purchase agreement with the seller <br />of the property and the acquisition loan structuring. <br /> <br />FISCAL IMPACT <br />This project will utilize $1,099,000 from the City’s Affordable Housing Fund, $189,000 <br />from the City’s federal HOME grant funds, $289,750 from the City’s federal CDBG funds <br />for a total of $1,577,750. In order to make the loan, the Affordable Housing Fund will <br />require a short-term (less than one year) loan from the General Fund in an amount of <br />$373,981 since expenditures to fund the loan are expected to be incurred prior to the <br />Affordable Housing Fund receiving revenue. The resolution approving this short-term <br />loan is attached to this Staff Report. <br />ENVIRONMENTAL REVIEW <br />A National Environmental Protection Act (“NEPA”) review was completed for this project <br />and it was determined to be categorically excluded. The provision of a loan of <br />Affordable Housing Funds as specified above is not a project under CEQA Guidelines <br />Section 15378 in that it has no potential for any direct or reasonably foreseeable indirect <br />physical change in the environment. <br /> <br />6.3.E. - Page 2