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To the Honorable Mayor end City Council <br /> From the City Manager <br /> <br />December 16, 2002 <br /> <br />Subject _ <br />Redwood Court Rehabilitation & Preservation Project <br /> <br />Recommendation <br />Approve funding agreement allocating $258,974 of 2002-03 HOME funds to Redwood <br />Court for Needed Repairs. <br /> <br />Background <br />In 1982, the City and County deeded abandoned streets at Chestnut and Spruce Streets to <br />MidPeninsula Housing Coalition (MPHC) to create a site and to build affordable housing. <br />The land was assembled to create 622 Chestnut and 635 Spruce Streets. MPHC formed <br />MP Redwood Court Associates (RCA) and built 27 two and three bedroom units for Iow- <br />income families at this site. The project -- named R~dwood Court -- also received federal <br />rent subsidies that paid the majority of operating costs and assured that residents pay no <br />more than 30% of their income for housing. The project is now 20 years old, in need of <br />repair, and the rent subsidies are scheduled to terminate in 2003. <br /> <br />MPHC has received approval from the' California State Housing Financing Authority <br />(CH FA) to buy out the limited partner to prevent these units from converting to market rate <br />rents. MPHC will also be applying for a 10 year renewal of the rent subsidies. As a <br />condition for refinancing, CHFA requires that certain improvements be made as a <br />prerequisite of buying out the'limited partnership and refinancing their first mortgage. <br />These improvements will also help the project receive higher rents to pay for operating <br />costs. <br /> <br />The total cost of the improvements is $866,893. MidPeninsula currently has $607,919 in <br />project reserves for these improvements but HUD will not allow them to draw all of these <br />funds at one time. <br /> <br />Some of the improvements must be made immediately to maintain the affordability of this <br />project, and others can be phased in over 5 years and funded from project reserves. The <br />Housing and Human Concerns Committee (HHCC) reviewed this project at their meeting <br />on June 25, 2002 and recommended that the Council loan $258,974 for immediate repairs <br />to facilitate the refinancing of this project and preserve 27 affordable units. <br /> <br />The HHCC's recommendation was that the funds be loaned to MPHC with a 30 year term <br />at 0% interest. The immediate repairs include replacing the roofs, repairing dry rot on the <br /> <br /> <br />