Attachments 1 and 2RESOLUTION 2014-
RESOLUTION OF THE TOWN COUNCIL
OF THE TOWN OF LOS GATOS
AUTHORIZING THE TOWN MANAGER TO EXECUTE AGREEMENTS
FACILITATING THE TRANSFER OF 185 ANNE WAY (APN 527 -48 -020) AND 14390
BLOSSOM HILL ROAD (APN 527 -31 -013) SENIOR GROUP HOMES FROM SENIOR
HOUSING SOLUTIONS (FORMERLY PROJECT MATCH) TO CHARITIES HOUSING
DEVELOPMENT CORPORATION (LOS GATOS SENIOR HOMES LLC)
AND NEW REHABILITATION LOAN AGREEMENTS ADDRESSING NECESSARY
REPAIRS AND IMPROVEMENTS TO PRESERVE THE LONGTERM
AFFORDABILITY AND MAINTENANCE OF THE HOMES IN THE TOWN'S
AFFORDABLE HOUSING STOCK
WHEREAS, the Town of Los Gatos has a State certified Housing Element; and
WHEREAS, the Housing Element has programs for the production and preservation of
housing opportunities for lower income residents; and
WHEREAS, the Town of Los Gatos has adopted a Below Market Price (BMP) Housing
Ordinance and BMP Housing Program Guidelines which require developers to provide BMP
Housing In -lieu Fees to assist with the Town's affordable housing efforts; and
WHEREAS, the BMP Housing Program Guidelines allow BMP Housing In -lieu Fees to
be used to supplement projects funded by the former Los Gatos Redevelopment Agency; and
WHEREAS, the Town of Los Gatos Redevelopment Agency previously provided
financial assistance to Senior Housing Solutions (Project Match) to facilitate the acquisition of two
single family dwelling located at 185 Anne Way and 14390 Blossom Hill Road for use as shared
group homes for lower income seniors; and
WHEREAS, Senior Housing Solutions desires to cease operations as a non -profit public
benefit corporation and transfer the two properties and the associated obligations to Charities
Housing Development Corporation (Los Gatos Senior Homes LLC) ; and
ATTAcHmNT 1
WHEREAS, the Town of Los Gatos has worked cooperatively with the County of Santa
Clara and other jurisdictions to avoid displacement of lower income seniors and to facilitate the
preservation of the affordable housing units previously operated by Senior Housing Solutions.
NOW, THEREFORE, BE IT RESOLVED, that Town Council of the Town of Los
Gatos does hereby authorize the Town Manager to execute:
A) Agreements facilitating the transfer of 185 Anne Way (APN 527 -48 -020) and 14390
Blossom Hill Road (APN 527 -31 -013) senior group homes from Senior Housing Solutions
(formerly Project Match) to Charities Housing Development Corporation (Los Gatos Senior
Homes LLC)
B) New rehabilitation loan agreements not exceeding a total of $159,000 to address
necessary repairs and improvements for these properties and to preserve the long -term
affordability and maintenance of the homes in the town's affordable housing stock.
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of Los
Gatos, California, held on the 16th day of December, 2014, by the following vote:
COUNCIL MEMBERS:
AYES:
NAYS:
ABSENT:
ABSTAIN:
SIGNED:
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
ATTEST:
CLERK ADMINISTRATOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
\ DIF\ RFSOS':2611 RES0 -S HS Grn up Home I iami'm and bmn,Ao::x
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CHARJTIES HOUSING
December 4, 2014
Mr. Ervin Ordonez
Town of Los Gatos
110 E. Main Street
Los Gatos, CA 95030
RE: Senior Housing Solutions — Transfer of Properties to the Los Gatos Senior Homes LLC
Dear Erwin:
Thank you very much for your assistance ip attempting to acquire and preserve the two properties
currently owned by Senior Housing Solutions (SHS) in the Town of Los Gatos, referred to here as 185
Anne Way and 14390 Blossom Hill Road (Properties). As you know these two homes currently serve
extremely low income seniors and Charities Housing (Charities), through its affiliate Los Gatos Senior
Homes LLC, intends to acquire and preserve the affordability and existing operational requirements for the
next 55 years. This letter is an attempt to briefly summarize the transaction and expected costs.
These homes, like the other homes in the SHS portfolio, have multiple layers of financing, not only from
the Town of Los Gatos, Successor Agency to the Redevelopment Agency (Town of Los Gatos SARA), but
also the Housing Trust Silicon Valley (HTSV) and Santa Clara County (SCC). In addition the Town is
considering providing an additional $159,000, divided between the two properties, to help pay for some of
the transition costs and repairs that are needed to correct some deferred maintenance items.
Current Loan Terms
Before assuming the loans, it is necessary to amend /clarify, as much as possible, some of the loan terms
so that they are consistent among all of the lenders. The terms that need clarification are as follows
• The minimum age for seniors will be 62 years old;
• The maximum Area Medium Income (AMI) is 50 %. Both properties have Section 8 Place -Based
Vouchers, and as a result the maximum AMI will be dictated by the Housing Authority of the
County of Santa Clara (HA) requirements;
• The percentage of income paid by the tenant for rent will also be consistent with HA requirements;
and
• The maturity date of the loans will set at 55 years, as of close of escrow at the time the Properties
are transferred.
Cost of Property Rehabilitation and Termite Remediation and Other Fees
A part of Charities' due diligence, an assessment of the condition of each property was completed.
Those investigations, both a Physical Needs Assessment (PNA) and Termite Report revealed that some
deferred maintenance items as well as some ADA upgrades should be completed to ensure the physical
asset is protected and the needs of the frail seniors living in the development are met. Installation of
photovoltaic solar panels for the Anne Way property is also planned to increase sustainability at the
property. The Blossom Hill property already has photovoltaic solar panels. ATTACHMENT 2
SOBRATO CENTER FOR NONPROFITS - SAN JOSE 1400 PARKMOOR AVENUE, SUITE 190 SAN JOSE CA 95126
MAIN: 408 -550 -8300 FAX 408 - 550-8339 WWW.CHARITIESHOUSING.ORG
6 CHARITIES HOUSING
Moreover, there are various costs and fees associated with the acquisition of the properties in addition to
the PNA and Termite reports, these include: closing costs, legal costs (LLC formation and property
transfer documents), audit fees, and resident security deposits. SHS collected $2,794 in security deposits
from the current residents, but failed to segregate the funds in a dedicated security deposit account, thus
these funds need to be replenished.
Rehabilitation per PNA
$63,907
$31,726
Termite Repair and Abatement
$12,218
$ 4,195
Physical Needs Assessment Report
$ 1,000
$ 1,000
Termite Report
$ 125
$ 125
Tenant Relocation During Tenting
$ 4,500
N/A
Closing Costs (Recording, Title & Taxes)
$13,303
$ 7,007
Legal Costs
$ 3,650
$ 3,650
Audit Fees for 2013 and 2014
$ 4,900
$ 4,900.
Resident Security Deposits
j $ 1,397
j $ 1,397
I Total
$105,000
a
Request for Change in Loan Terms and Funds
Given the terms of the loans and constraints of both the County and Housing Trust, we request the
following from the Town of Los Gatos in order to align the loans accordingly:
The maximum AMI shall be set at 50 %;
• The minimum age of seniors should be 62 years of age; and
• The maturity date of the loans will be 55 years from the date which the LLC takes title to the
property through recordation.
The cost to rehabilitation, termite remediation and other fees directly related to the properties total
$159,000 and we kindly request a deferred loan to cover these costs as detailed in the chart above.
Next Steps
To expedite the transaction, our attorney is currently drafting the following documents for Staff's and City
Attorney's review: grant and regulatory agreement and corresponding promissory note and deed of trust.
Our attorney is also drafting the subordination and intercreditor agreement with the lien positions you have
requested.
SORRATO CENTER FOR NONPROFITS - SAN JOSE 1400 PARKMOOR AVENUE, SUITE 190 SAN JOSE CA 95126
MAIN: 408 -550 -8300 FAX 408 -550 -8339 WWW.CHARITIESHOUSING.ORG
CHMUTIES HOUSING
Please note that our attorney has already drafted the remaining documents for the transaction such as the
loan assignments, Purchase and Sale Agreement (PSA), bill of sale, escrow instructions and grant deed.
These will be updated and circulated for review once we receive confirmation of approval of our request to
amend the terms of the loans.
Lastly, it should be reiterated here that the properties are subsided by Section 8 Place -Based Vouchers
effective May 30, 2012 for a 15 year initial contract. We have submitted a request to the HA to assign the
vouchers to the new entity.
If you have any questions or need any additional information please feel free to respond to me via email at
Kathy Robinson at krobinson(a )charitieshousing org or call at 408 401 7287.
Sincerely,
Kathy Robinson
Director of Housing Development
SOBRATO CENTER FOR NONPROFITS - SAN JOSE 1400 PARKMOOR AVENUE, SUITE 190 SAN JOSE CA 95126
MAIN: 408 -550 -8300 FAX 408 -550 -8339 W ATW.CHARITIESHOUSING.ORG
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