Item 9 Staff Report Approve Resolution Authorizing the Restructuring of a CDBG-Funded Acquisition Loan to Community Housing Developers for the 95 Fairview Fourplex and Authorize the Town Manager to Execute Related DocumentsMEETING DATE: 4/20/98
ITEM NO.
COUNCIL AGENDA REPORT
DATE: April 16, 1998
TO: MAYOR AND TOWN COUNCIL
FROM: TOWN MANAGER
SUBJECT: APPROVE RESOLUTION AUTHORIZING THE RESTRUCTURING OF A CDBG-FUNDED
ACQUISITION LOAN TO ,COMMUNITY HOUSING_ _DEVELOPERS' FOR THEr' 9.5
IFAIRVIEW PLAZA FOURPLEX AND AUTHORIZE THE TOWN MANAGER TO EXECUTE
RELATED DOCUMENTS.
RECOMMENDATION:
Approve resolution authorizing the restructuring of a CDBG-funded acquisition loan to Community Housing Developers
for the 95 Fairview Plaza fourplex and authorize the Town Manager to execute related documents.
BACKGROUND:
Community Housing Developers (CHD) owns and manages a Victorian fourplex at 95 Fairview Plaza. The four units (one
single, two-1 bedroom, one 2-bedroom) are rented at 50% of market rate to very low income households (9 individuals total).
In 1986, the Town issued two loans to CHD for the acquisition and rehab of the fourplex with the intent that the units house
low and moderate income households. CDBG funds were used to finance the loans, which are structured as follows:
1.
$30,000
Town
#626
Secured by Deed of Trust
Recorded 7/1/86
6% Compounded
Annually
Payment of principal and interest
deferred until July, 1997. Payment of
principal and interest to begin July,
1997 and continue through 2004.
2.
$111,500
Town
#624
Secured by Deed of Trust
Recorded 5/28/86
5% Simple
Interest
Deferred Loan; Due 5/23/97
DISCUSSION:
Loan #626 ($30,000): In accordance with the terms of the loan, CHD now makes loan payments to the Town of $795.16
per month. These payments will continue through June 2004, at which time the loan, plus interest, will be paid in full.
Loan #624 ($111,500): This loan was due and payable May 23, 1997. Town staff and CHD have spent time since then
reviewing the loan documents and considering alternatives that will ensure the continued affordability of the rental units, as
well as accommodate the financial realities of CHD in managing a property with limited income. CID is proposing that
the maturity date of this loan be extended for thirty (30) years (through 2027) and that monthly payments of $1,269.30
commence after Town Loan #626 is paid in full, i.e., start July 10, 2004 and continue through June 10, 2027. A Cash Flow
Analysis prepared by CHD and reviewed by staff confirms that CHD can afford to meet its debt obligations to the Town and
other lenders if Loan #624 is restructured in this way.
PREPARED BY: Regina A a .o' ommunicos Director
Reviewed by: Attorney ``F'. ance Revised: 4/16/98 2:09 pm
Reformatted: 10/23/95
PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: APPROVE RESOLUTION AUTHORIZING THE RESTRUCTURING OF A CDBG-FUNDED
ACQUISITION LOAN TO COMMUNITY HOUSING DEVELOPERS FOR THE 95 FAIRVIEW PLAZA FOURPLEX
AND AUTHORIZE THE TOWN MANAGER TO EXECUTE RELATED DOCUMENTS.
April 16, 1998
CHD's debt on the property is as follows:
Loan
+Positio
n
Lender
Original Loan
Amount
**Loan Balance
with Interest
Monthly
Payment
Due Date
1
2
3
4
SAMCO
Town of Los Gatos
Town of Los Gatos
Bricmont
$ 127,000
111,500
30,000
13,700
$ 108,577
176,193
58,657
13,700
$ 877
-0-
834
150
5
CALDAP*
85,777
85,777
-0-
6
Small Business
Admin. (SBA)*
10,000
8,803
49
6/1/2016
6/10/2028
6/10/2004
12/31/2002
10/11/2021
7/2/2022
Total
*Resulted from 1989 earthquake.
**Through December 1997
The Town's Housing Element requires that the Town make every effort to preserve the existing supply of affordable housing
units. While CHD is meeting its obligation to make payments on its $30,000 loan, it cannot at the same time afford to pay
off the $111,500 loan without selling the property. Such a sale would result in the loss of four (4) affordable housing units
in Town. In addition, the Town has no immediate need or altemative for spending the CDBG monies that would come from
the sale of Fairview Plaza. Sufficient BMP in -lieu and redevelopment funds exist to finance any future affordable housing
project undertaken by the Town. As such, it is in the best interest of the Town and CHD to restructure the $111,500 loan
as proposed. County of Santa Clara/Housing and Community Development staff agree that restructuring the loan is
permissible under CDBG guidelines.
The 1989 earthquake required CHD to obtain funds from other sources to rebuild what had become an uninhabitable
property (over $200,000 was raised in loans and grants for rehab). The CALDAP and SBA loans referenced above resulted
from the earthquake (a portion of the CALDAP loan is forgiven each year as long as the property remains affordable). The
rehab work completed after the earthquake, while in keeping with original design criteria, improved the property to meet
modern earthquake and safety standards. As such, the property is in good condition and fully occupied. A recently
conducted Comparative Market Analysis reveals that single-family residences in the area sell for approximately $411 per
sq. foot. Fairview Plaza, although a fourplex, is comprised of 2,735 square feet. A quick calculation reveals that the current
value of the property far exceeds existing debt. The property is appropriately insured through Golden Eagle Insurance
Company.
$377,977
$ 451,707
$1,910
CONCLUSION:
CHD has one acquisition loan ($111,500) and one rehab loan ($30,000) with the Town. These loans were issued in 1986
to help CHD acquire and rehab a rental fourplex located at 95 Fairview Plaza in Los Gatos. Monthly payments of $795.16
on the $30,000 loan are now made and will continue through June 2004, when the loan, plus interest, will be paid in full.
The recommended action authorizes CHD to make monthly payments on the $111,500 acquisition loan starting July 2004
until it is paid in full June 2027 (see also Attachment A). The Town's Loan Review Committee supports the recommended
loan restructuring.
ENVIRONMENTAL ASSESSMENTS:
This project is not a project defined under CEQA, and no further action is required.
PAGE 3
MAYOR AND TOWN COUNCIL
SUBJECT: APPROVE RESOLUTION AUTHORIZING THE RESTRUCTURING OF A CDBG-FUNDED
ACQUISITION LOAN TO COMMUNITY HOUSING DEVELOPERS FOR THE 95 FAIRVIEW PLAZA FOURPLEX
AND AUTHORIZE THE TOWN MANAGER TO EXECUTE RELATED DOCUMENTS.
Apri! 16, 1998
FISCAL IMPACT:
$30,000 Rehab Loan: No change to existing loan terms and conditions recommended (monthly payments of $795.16, 6%
interest, to continue through June 2004).
$111,500 Acquisition Loan: Restructure in accordance with the following terms:
• Loan deferred for seven years (FY 97/98 - FY 03/04) at 5% interest through July 2004.
• Monthly payments of $1,269.30 to commence July 10, 2004 and continue through June 2027 (5% interest, 23 years
FY 03/04 through FY 26/27, based on beginning balance of $212,314.58 as of July 2004).
All loan payments to be deposited to Community Development Block Grant (CDBG) fund #218.
Distribution: Community Housing Developers, Ron Morgan, 255 North Market Street, Suite 290,
San Jose, CA 95110
Bill McWood, Management Analyst, County of Santa Clara, Housing and Community Development,
1735 North First Street, Suite 265, San Jose, CA 95112
CSD41:a:1chdloan.rdo
RESOLUTION 1998-
RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS
AUTHORIZING THE TOWN MANAGER TO EXECUTE DOCUMENTS
REQUIRED TO RESTRUCTURE AN ACQUISITION LOAN TO
COMMUNITY HOUSING DEVELOPERS FOR THE
95 FAIRVIEW PLAZA FOURPLEX
WHEREAS, Community Housing Developers (CHD) owns and manages a Victorian
fourplex at 95 Fairview Plaza that houses very low income households.
WHEREAS, in 1986, Town Community Development Block Grant (CDBG) funds were used
to finance a $111,500 deferred loan, due and payable in May 1997, to CHD at 5% interest.
WHEREAS, the Town and CHD desire to defer payment on the loan through July 2004, at
which time monthly payments of $1,269.30 will commence and continue through June 2027, when
the loan plus interest at 5% will be paid in full.
NOW, THEREFORE, THE TOWN COUNCIL OF THE TOWN OF LOS GATOS
DOES HEREBY RESOLVE THAT THE TOWN MANAGER IS AUTHORIZED TO
EXECUTE:
1) all documents required to restructure the $111,500 loan to Community Housing Developers.
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of Los
Gatos, California, held on the 20th day of April, 1998, by the following vote.
COUNCIL MEMBERS:
AYES:
NAYS:
ABSENT:
ABSTAIN:
SIGNED:
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
ATTEST:
CLERK OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
CSD41:1chdloan.rdo
OFI ,E OF THE TOWN CLERK
ORDINANCES & RESOLUTIONS
ORIGINATING DEPT:
COUNCIL AGENDA DATE:
COUNCIL AGENDA ITEM:
SUBJECT:
Number:
Date of Adopt:
4id-o•cjg
Q5 9-6-0. 011.4,J
RESOLUTION
1QgS -
1�•ao•98
PUBLICATION REQUIRED
COUNCIL ACTION:
AYES:
NAYS:
ABSENT:
ABSTAIN:
COUNCIL MEMBERS NAMES:
Number:
Date of Intro:
Date of Adopt:
ZONE CHANGE:
Randy Attaway, Joanne Benjamin, Steven Blanton, Jan Hutchins,
Mayor(or Chairman) LINDA LUBECK
ORDINANCES and RESOLUTIONS MUST BE RETURNED TO TOWN CLERK
BY WEDNESDAY AT 12 NOON.
ORDINANCES MUST BE READY FOR IMMEDIATE PUBLICATION
TC:07:RESO`ORD
RESOLUTION 1998-35
RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS
AUTHORIZING THE TOWN MANAGER TO EXECUTE DOCUMENTS
REQUIRED TO RESTRUCTURE AN ACQUISITION LOAN TO
COMMUNITY HOUSING DEVELOPERS FOR THE
95 FAIRVIEW PLAZA FOURPLEX
WHEREAS, Community Housing Developers (CHD) owns and manages a Victorian
fourplex at 95 Fairview Plaza that houses very low income households.
WHEREAS, in 1986, Town Community Development Block Grant (CDBG) funds were
used to finance a $111,500 deferred loan, due and payable in May 1997, to CHD at 5% interest.
WHEREAS, the Town and CHD desire to defer payment on the loan through July 2004,
at which time monthly payments of $1,269.30 will commence and continue through June 2027,
when the loan plus interest at 5% will be paid in full.
NOW, THEREFORE, THE TOWN COUNCIL OF THE TOWN OF LOS GATOS
DOES HEREBY RESOLVE THAT THE TOWN MANAGER IS AUTHORIZED TO
EXECUTE:
1) all documents required to restructure the $111,500 loan to Community Housing
Developers.
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of
Los Gatos, California, held on the 20th day of April, 1998, by the following vote.
COUNCIL MEMBERS:
AYES: Randy Attaway, Joanne Benjamin, Steven Blanton, Jan Hutchins
Mayor Linda Lubeck
NAYS:
ABSENT:
ABSTAIN:
None
None
None
SIGNED:
/s/ Linda Lubeck
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
ATTEST:
/s/ Marian V. Cosgrove
CLERK OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
Town Council Minutes April 20, 1998
Redevelopment Agency Los Gatos, California
RATIFICATION OF PAYROLL/MARCH 1998 (05.V)
Motion by Mrs. Benjamin, seconded by Mr. Hutchins, that Council ratify the check registers for
the payrolls of March 8 through March 21, 1998 paid on March 27, 1998 in the amount of
$324,386.88. Carried unanimously.
ACCOUNTS PAYABLE/RATIFICATION/MARCH-APRIL 1998 (06.V)
Motion by Mrs. Benjamin, seconded by Mr. Hutchins, that Council ratify the accompanying
check registers for accounts payable invoices paid on March 27, April 3 and April 10, 1998 in
the amount of $511,250.74. Carried unanimously.
MINUTES OF APRIL 6, 1998 (07A.V)
Motion by Mrs. Benjamin, seconded by Mr. Hutchins, that Council approve the Minutes of April
6, 1998 as corrected on page six. The center of the motion reads as follows, "Deny this
application and do not move it anywhere else." This should be corrected to the following, "
Council does not feel it has the ability to request denial of this application because it has no
other site to recommend." Carried unanimously.
MINUTES OF APRIL 13, 1998 (07B.V)
Motion by Mrs. Benjamin, seconded by Mr. Hutchins, that Council approve the Joint Town
Council/Redevelopment Agency Minutes of April 13, 1998 as submitted. Carried unanimously.
UNION AVE & BLOSSOM HILL RD/STORM DRAIN PIPE/GREENBRIAR CO (08.37)
Motion by Mrs. Benjamin, seconded by Mr. Hutchins, that Council rebudget $60,910 from fund
461-36000 for storm drainage improvements - Greenbriar Saratoga Road Company. Carried
unanimously.
FAIRVIEW PLAZA 95/COMMUNITY HOUSING DEVELOPERS/RESOLUTION 1998-35 (09.09)
Motion by Mrs. Benjamin, seconded by Mr. Hutchins, that Council adopt Resolution 1998-35
entitled, RESOLUTION OF THE TOWN OF LOS GATOS AUTHORIZING THE TOWN
MANAGER TO EXECUTE DOCUMENTS REQUIRED TO RESTRUCTURE AN
ACQUISITION LOAN TO COMMUNITY HOUSING DEVELOPERS FOR THE 95 FAIRVIEW
PLAZA FOURPLEX. Carried unanimously.
TREE CITY U.S.A./TOWN OF LOS GATOS/18TH YEAR AWARD (11.23)
Motion by Mrs. Benjamin, seconded by Mr. Hutchins, that Council accept designating the Town
of Los Gatos "Tree City U.S.A." Carried unanimously.
GENERAL PLAN TASK FORCE II/APPOINTMENTS/RESOLUTION 1998-36 (12.20)
Motion by Mrs. Benjamin, seconded by Mr. Hutchins, that Council adopt Resolution 1998-36
entitled, RESOLUTION OF THE TOWN OF LOS GATOS ESTABLISHING THE 30 MEMBER
GENERAL PLAN TASK FORCE II AS AN ADVISORY BODY TO THE TOWN COUNCIL.
Carried unanimously.
ANNEXATION/BLOSSOM HILL 21/BLOSSOM HILL 14734/RESOLUTION 1998-37 (13.14)
Motion by Mrs. Benjamin, seconded by Mr. Hutchins, that Council adopt Resolution 1998-37
entitled, RESOLUTION OF THE TOWN OF LOS GATOS ORDERING THE
REORGANIZATION OF CERTAIN UNINHABITED TERRITORY DESIGNATED AS
BLOSSOM HILL ROAD 21 TO THE TOWN OF LOS GATOS. Carried unanimously.
TC: D10: MM042098
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