AgdaPkt 2018-02-12 Joint SA PFA - Laserfiche WebLink

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funding for this project furthers the City’s goals to preserve existing affordable housing, produces additional deed restricted affordable housing units for extremely low, very low and low income households, improves the condition of affordable housing and prevents displacement of 55 existing Redwood City households. ANALYSIS The recommended loan terms for the $1,100,000 is a 3% simple interest, 55 year, residual receipts loan. Annual loan payments shall be due and payable on a residual receipts basis in accordance with the formula set forth in the funding agreement and promissory note. In connection with the loan, the City will subordinate its loan to a loan made by Silicon Valley Bank which is necessary for the projects tax credit financing. The loan documents include a declaration of affordability covenants, promissory note and deed of trust that will be executed and recorded on title at the close of escrow. The declaration of affordability covenants requires the units to remain affordable to extremely low, very low and low income households for 55 years. The documents also include an Intercreditor Agreement with the County of San Mateo, which establishes that the City and County Deeds of Trust on the property will be equal in lien priority. MidPen is scheduled to close escrow to complete this property acquisition on February 28, 2018. In order to prevent displacement of any current tenants MidPen will set aside 21 units for extremely low income households, 32 units for very low income households and 1 unit for a low income household. One unit will be an onsite manager unit not subject to affordability restrictions as is customary in 100% affordable housing developments. This represents a minor change to the affordability initially estimated, which anticipated approximately 28 units to be restricted for extremely low income households and 27 units at very low income. ALTERNATIVES The City could recommend alternative loan terms, however such action would jeopardize the project due to the tax credit financing and requirements to close the loan on February 28, 2018. FISCAL IMPACT This project will utilize $1,100,000 from the City’s Affordable Housing Fund. In order to make the loan, the Affordable Housing Fund may require a short-term (less than one year) loan from the General Fund in an amount of $910,000 since expenditures to fund the loan may be incurred prior to the Affordable Housing Fund receiving revenue. The City anticipates receipt of Affordable Housing Fund revenue of approximately $1.4 million in mid-February 2018, however this payment could be delayed so the approval of a short term loan is a contingency in the case funds are not received at that time. If sufficient funds are received there will be no short term loan. The resolution approving this short-term loan is attached to this Staff Report. 6.3.A. - Page 2