08 Staff Report - Very Low-Income Senior HousingMEETING DATE: 4/7/08
ITEM NO: Q
COUNCIL/AGENCY AGENDA REPORT
DATE: March 31, 2008
TO: MAYOR AND TOWN COUNCIL/CHAIR AND MEMBERS OF THE
REDEVELOPMENT AGENCY
FROM: GREG LARSON, TOWN MANAGER/EXECUTIVE DIRECTOR
SUBJECT: INCREASE A PREVIOUS COMMITMENT TO LOAN $777,700 OF
REDEVELOPMENT AGENCY LOW AND MODERATE INCOME
HOUSING FUND MONIES TO $832,700 FOR SENIOR HOUSING
SOLUTIONS TO ACQUIRE AND REHABILITATE A HOME TO
PROVIDE FIVE UNITS OF VERY LOW-INCOME SENIOR
HOUSING, MODIFY THE TERMS OF THE LOAN, AND DIRECT
STAFF TO NEGOTIATE THE LOAN DOCUMENTS
RECOMMENDATION:
Increase a previous commitment to loan $777,700 of Redevelopment Agency Low and
Moderate Income Housing Fund monies to $832,700 for Senior Housing Solutions to
acquire and rehabilitate a home to provide five units of very low-income senior housing,
modify the term of the loan, and direct staff to negotiate the loan documents.
BACKGROUND:
On December 3, 2007, the Town of Los Gatos Redevelopment Agency (RDA) Board
approved a funding commitment of $777,700 to Senior Housing Solutions (SHS) to
purchase and rehabilitate a home in Los Gatos for five units of senior housing. The five
rooms would be rented to very low-income seniors whose incomes are $1000 per month
or less. Details are contained in the Council/Agency Staff Report for that meeting
(Attachment 1). At that time SHS presented a pro forma budget of $1,332,400 which
assumed the purchase price of a single family home to be $965,000.
Two changes impacting the project budget have occurred. First, the acquisition and
rehabilitation costs are higher than previously projected which raised the project budget
by roughly $110,000 to $1,442,595. Second, SHS was able to obtain only $150,000 of
funding through the Santa Clara County CDBG program rather than $450,000 as shown
in the pro forma, leaving a total funding gap of $410,000.
PREPARED BY: Bud N. Lortz, Deputy Executive Director L
Reviewed by: %5-s Assistant Town Manager/Deputy Director own
Attprney/General Counsel Clerk Administrator/Secretary Finance
V Community Development
PAGE 2
MAYOR AND TOWN COUNCIL/CHAIR AND MEMBERS OF THE
REDEVELOPMENT AGENCY
SUBJECT: INCREASE A PREVIOUS COMMITMENT TO LOAN $777,700 OF
REDEVELOPMENT AGENCY LOW AND MODERATE INCOME
HOUSING FUND MONIES TO $832,700 FOR SENIOR HOUSING
SOLUTIONS
March 31, 2008
To assist SHS in addressing the funding gap, staff worked with the Housing Trust of
Santa Clara County to increase their investment in the project by $350,000 to a total of
$450,000. This represents the balance of funds that the Town has contributed to the
Housing Trust.
With the increased investment from the Housing Trust, the shortfall is roughly $60,000.
SHS will invest an additional $5,000 of its own funds in the house, leaving a remaining
shortfall of $55,000.
DISCUSSION:
1. Request from Senior Housing Solutions:
SHS requests that the RDA Board increase its funding commitment for their project
from $777,700 to $832,700 to fill the remaining shortfall. SHS's revised pro forma
includes now includes funding from following sources (Attachment 2):
Town of Los
Gatos
County
CDBG/Home
Program
Housing
Trust
Senior
Housing
Services
TOTAL
$832,700
$150,000
$450,000
$9,895
$1,442,595
SHS has made an offer to purchase a single family home in Los Gatos. The offer
contains a financing contingency which expires on April 17, 2008.
2. General Terms of Loan and Agreements:
At this stage in the funding process, this request is only for a commitment of funding
from the RDA. RDA staff would then proceed to draft the formal agreements with
SHS, which would be brought back to the RDA Board for approval.
At the previous RDA Board meeting, staff proposed that this loan mirror the terms
contained in the previous loan to Project Match approved by the RDA Board in 2003.
Those terms are summarized as follows:
• Loan term of 99 years at which time the loan will be due and payable in full or the
property would revert back to the Town.
■ 3% interest rate with deferred payments for the term of the loan.
• Units must be rented to seniors that qualify as a Very Low Income Household.
PAGE 3
MAYOR AND TOWN COUNCIL/CHAIR AND MEMBERS OF THE
REDEVELOPMENT AGENCY
SUBJECT: INCREASE A PREVIOUS COMMITMENT TO LOAN $777,700 OF
REDEVELOPMENT AGENCY LOW AND MODERATE INCOME
HOUSING FUND MONIES TO $832,700 FOR SENIOR HOUSING
SOLUTIONS
March 31, 2008
1 '
■ Preference is given to seniors that live or work in Los Gatos.
SHS has requested that the loan term be modified. They propose a loan/revocable
grant that does not have a specific repayment date, but would be repayable upon sale
of the property or default on any of the Town's conditions. SHS states this type of
funding would eliminate the impact of a deferred loan on their balance sheet by
eliminating the annual accrued interest liability. This approach continues to ensure
that SHS re -pay the Town including interest upon sale or default. SHS also states
they are willing to designate this property as affordable housing in perpetuity if the
Town is willing to finance the project with the revocable grant. The City of Campbell
recently used a similar financing vehicle for a project in their jurisdiction.
3. Consistency with Plans:
This request is consistent the following Town plans as summarized below:
• General Plan Housing Element: The Housing Element and Housing Element
Appendix acknowledge the need for housing at various affordability levels and
for senior housing. The Element states that population of seniors in the Town will
increase 90 percent from 2000 to 2020.
• Redevelopment Plan and Redevelopment Law: State Redevelopment Law and
the Redevelopment Plan require the expenditure of 20% of redevelopment tax
increment revenues for affordable housing. The funding of the SHS request will
fall within the timeframe required by State law for expenditure of monies from
the Los Gatos RDA's Housing Fund.
■ Redevelopment Implementation Plan: These funds would target low-income
households as encouraged by the Implementation Plan and State Redevelopment
Law.
The Plan and State law require that a minimum of 84.7% of the RDA Housing
Fund expenditures target non -age restricted housing within the implementation
period of 2002-2014. With approval of the subject loan, the RDA would be
required to spend a minimum of roughly $6,800,000 on non -senior housing. Staff
sees no issues with this amount given the current Housing Fund balance of
roughly $6.2 million and roughly $1.2 million in revenues deposited into the fund
annually in this and future fiscal years.
PAGE 4 r"'‘
MAYOR AND TOWN COUNCIL/CHAIR AND MEMBERS OF THE
REDEVELOPMENT AGENCY
SUBJECT: INCREASE A PREVIOUS COMMITMENT TO LOAN $777,700 OF
REDEVELOPMENT AGENCY LOW AND MODERATE INCOME
HOUSING FUND MONIES TO $832,700 FOR SENIOR HOUSING
SOLUTIONS
March 31, 2008
CONCLUSION:
The revised request is consistent with State Redevelopment Law and the Redevelopment
Plan. An increased funding commitment of $832,700 to Senior Housing Solutions will
facilitate a five unit, very low-income senior housing project. The project would be
funded with monies from the RDA's Housing Fund that must be spent on affordable
housing projects. The facility would utilize an existing house in Los Gatos and is
anticipated to be operational in roughly one year. If this commitment is authorized, staff
will return with the necessary agreements for Board approval.
ENVIRONMENTAL ASSESSMENT:
Is not a project defined under CEQA, and no further action is required. A categorical
exemption will need to be granted when the Agency Board considers the final loan
agreements.
FISCAL IMPACT:
Funding for this $832,700 request would come from the Redevelopment Agency Housing
Fund. The Fund has a current balance of approximately $6.5 million.
Attachments:
1. Council/Agenda Staff Report for the meeting of December 3, 2007
2. Senior Housing Solutions Budget
Distribution:
Bob Campbell, Senior Housing Solutions, 512 Valley Way, Milpitas, CA 95035
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