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REPORT <br />To the Honorable Mayor and City Council <br />From the City Manager <br /> <br />June 26, 2017 <br /> <br />SUBJECT <br />Service League Request for Subordination of City Affordability Covenants to Support <br />Long Term Affordability of Shared Housing and Residential Treatment Services for <br />Individuals with Substance Abuse Disorders <br /> <br />RECOMMENDATION <br />Approve by motion, the subordination of City affordability covenants for two Service <br />League properties located at 96 Buckingham Avenue and 2820 Huntington Avenue to <br />permit the County of San Mateo to provide new senior loans for each and authorize the <br />City Manager to execute all documents necessary to complete the subordination <br /> <br />BACKGROUND <br />The City previously provided financial assistance to Service League of San Mateo <br />County, a nonprofit organization (Service League), to acquire two single-family homes. <br />These homes provide transitional shared housing for adults exiting incarceration. The <br />two single family homes were acquired by Service League in 2008 and 2009 and are <br />located at 96 Buckingham and 2820 Huntington, respectively. The City provided <br />$250,000 from its federal Community Development Block Grant (CDBG) and Home <br />Investment Partnership (HOME) funds for 96 Buckingham and $200,000 from its CDBG <br />funds for 2820 Huntington. The City’s financial assistance was provided for each <br />property subject to 55 year affordability deed restrictions. The City’s financial assistance <br />is conditioned upon the continued use of the properties for the 55 year terms. <br />Service League has been in compliance with the terms of their funding agreements and <br />affordability restrictions since the acquisition of the properties. The terms of the City <br />funding agreements and affordability restrictions require the Service League to obtain <br />City approval for subordination to new senior mortgage financing. <br />ANALYSIS <br />Service League is requesting that the City approve its loan subordination requests for <br />both properties in order to lower their mortgage payments. Service League was a <br />recipient of San Mateo County (“County”) Measure A funds, specifically the “Stabilizing <br />Residential Substance Abuse Providers” program. In May of 2016 the County Board of <br />Supervisors approved loans to the Service League to reduce their primary mortgage <br />6.1.B. - Page 1