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January 14,2002 <br /> <br />Subject <br />Funding Agreement with Housing Association for the Needy and Dispossessed (HAND) <br /> <br />Recommendation <br />Approve Modified Funding Agreement to allow Subordination to HAND's Loan from the <br />California Housing Finance Agency (CHFA). <br /> <br />Background <br />The City is a participating jurisdiction in the HOME Investment Partnership Program~, <br />authorized under the National Affordable Housing Act. The HOME program was <br />established to create partnerships between federal, local government and non-profits to <br />increase the supply of affordable housing for Iow-income families. Central to this <br />concept, local governments are required to match 25% of the HOME funds allocated <br />each year. The Statute also requires that 15% of the City's annual entitlement of HOME <br />funds be reserved for a qualified Community Housing Development Organization <br />(CHDO). Redwood City receives HOME funds and HAND is currently the only qualified <br />CHDO in San Mateo County that can receive these funds from Redwood City. <br /> <br />HAND owns a 36-unit apartment building in Redwood City. A major rehabilitation effort <br />totaling over a million dollars is underway. The City is assisting this rehabilitation with <br />funding from the HOME Program. In tandem with this rehabilitation, HAND is refinancing <br />the first mortgage through the California Housing Financing Agency (CHFA), with a <br />second loan from the Low Income Housing Fund. We have verified that CHFA will only <br />proceed with this refinancing if the City agrees to subordinate its loan to the state <br />finanbing. Staff recommends this subordination, and additional funding to HAND for this <br />purpose, under the following proposed changes and conditions: <br /> <br /> 1. Increase the City's loan amount from $153,144 to $240,400.22. Funds are <br /> available for this increase from the HOME CHDO allocation for 2000/20012 <br /> and carryover HOME funds from previous years. <br /> <br /> 2. Change the term from 15 years interest only to 30 years deferred principal and <br /> interest so that the City's loan is due after the CHFA loan has matured. <br /> <br /> HOME is not an acronym but a program name <br />2 <br /> The HOME fund for 2000-2001 was $400,000 of which $60,000(15%) is the amount available for CHDO. <br /> <br /> <br />