AgdaPkt 2020-07-13 Special Joint SA PFA

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6.B. - Page 3 of 177 from this fund to be used for the extremely low-income units. The Low and Moderate Income Housing Asset Fund deposits include $700,000 in Redevelopment Housing Successor CIP funds approved by the City Council in 2015 for affordable housing projects and $170,000 remaining from Redevelopment Housing Successor Legal Funds. The state requires the use of these funds for extremely low, very low, and low-income housing. In addition to the Low and Moderate Income Housing Asset Fund, $577,261 from the Housing In Lieu Fund and $512,414 from the Affordable Housing Fund will fund the loan for a total commitment of $3.5 million. The $3.5 million loan from the City represents a subsidy of $28,000 per unit, a fraction of the subsidy usually required for affordable housing developments. The funds will be made available as a loan under the following terms: • Interest Rate: 3% • Term of Affordability: 57 years • Term of the Loan: 57 years • Repayment: Annual payments will be based on 50% of residual receipts as defined in the loan agreement. When other public funding is involved, the City will negotiate the payment of residual receipts. For the first fifteen (15) years, the City will receive annual repayments of at least $25,000. • Collateral: Deed of Trust and Regulatory Agreement The Developer has agreed to use the City's loan to repay the bridge loan from HEART. Staff is currently having discussions with HEART and County housing staff about the possibility of HEART repurposing these funds to provide a loan, comprised of County housing funds, to Habitat for Humanity for its 612 Jefferson affordable, ownership housing project. The City had previously committed $2.5 million for the Habitat project using housing impact fees anticipated from another development but those funds are not forthcoming as anticipated, due to project delays. Regulatory Agreement Although ROEM has committed to providing 63 units for extremely low-income renters and 61 units for low income renters, the City cannot deed -restrict more than 49% of the units, or 61 units, due to limitations within Article 34 of the State Constitution. Article 34 prohibits the development of a low rent housing project with state or local public financing or assistance unless a majority of the voters of the jurisdiction have approved it. The City will be recording deed restrictions on 61 of the 63 extremely -low income units. The remaining two extremely low-income units and 61 low income units will have affordable deed -restrictions as a result of receiving County and tax credit funding. Subordination Agreement ROEM has requested that the City subordinate its loan to the project's existing construction/permanent loan from Citibank. This means the construction/permanent loan will be paid before the City loan is paid in the event of a default by ROEM. However, the City's affordability covenants would remain senior to the Citibank loan. Page 3 of 4 City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.ore 32