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6.D. - Page 2 of 19 <br />ANALYSIS <br />MHA used short term construction financing to build the project with the understanding of all lenders <br />that this loan would be replaced within a few years with permanent, lower -interest financing from the <br />California Housing Finance Agency ("CaIHFA") Mental Health Services Act Housing Program ("MHSA") and <br />from the California Department of Housing and Community Development ("HCD") Supportive Housing <br />Multifamily Housing Program ("SHMHP"). <br />The City currently has loans totaling $600,000 on the property and MHA requests that the City allow these <br />loans to remain in place and become subordinate to the new permanent loans, which means the <br />permanent loans will be paid before the City -issued loans are paid. They plan to close financing at the end <br />of March 2019. For each day that the new permanent financing is delayed it costs MHA approximately <br />$500 in interest. <br />FISCAL IMPACT <br />There will not be any fiscal impact to the City by subordinating to the new financing. <br />ENVIRONMENTAL REVIEW <br />This activity is not a project under California Environmental Quality Act (CEQA) as defined in CEQA <br />Guidelines, section 15378, because it has no potential for resulting in either a direct or reasonably <br />foreseeable indirect physical change in the environment. <br />PUBLIC NOTICE <br />Public Notification was achieved by posting the agenda, with the agenda items being listed, at least 72 <br />hours prior to the meeting. <br />ALTERNATIVES <br />The City could deny the request to subordinate to each of these loans which would jeopardize the project <br />financing necessary to convert the temporary loans to permanent loans which may result in the loss of <br />these affordable housing units. <br />ATTACHMENTS <br />Attachment A: CaIHFA - MHSA Subordination Agreement <br />Attachment 6: HCD - SHMHP Subordination Agreement <br />REPORT PREPARED BY: <br />Cindy Avila, Housing & Grants Specialist <br />cavila@redwoodcity.org <br />(650) 780-7229 <br />City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.ore <br />107 <br />