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Loan Agreements with Tiny Tim LP April 16, 2019 Page 2 DISCUSSION On June 20, 2017 City Council / Housing Authority approved a pre -loan commitment of funds for the development of an affordable housing project at Tiny Tim Plaza located at 2223 West Fifth Street ("Project") to be developed by Community Development Partners ("Developer") by a vote of 6:1 (Martinez opposed). City Council / Housing Authority approved a pre -loan commitment of $4.7 million in funds from the Housing Successor Agency ("Agency") and $1.3 million in funds from the City's Inclusionary Housing Funds. The $4.7 million in funds from the Housing Successor Agency come from loan repayments from the former Redevelopment Agency. These funds are officially referred to as the Low and Moderate Income Housing Asset Funds (LMIHAF). The $1.3 million in funds from the City's Inclusionary Housing Funds are funds generated through the payment of in -lieu fees when developers opt -out of developing affordable housing on-site and instead pay a fee. The Staff Report from June 20, 2017 is attached as Exhibit 1 and the pre -loan commitment is attached as Exhibit 2. After City Council / Housing Authority approves a commitment of funding for an affordable housing project, it can often take a substantial amount of time for a developer to secure their remaining financing. The majority of large multi -family affordable housing projects require Low - Income Housing Tax Credits which are very competitive for the higher value 9% Tax Credits with only two application deadlines a year and more difficult to finance with the lower value 4% Tax Credits. The Tiny Tim Plaza project received a commitment of $6 million in funding from City Council and after almost two years, the developer has now secured their remaining financing and they are prepared to close on their financing by May 1 and begin building the project. Now that the developer is ready to close, staff are returning to City Council with the two Loan Agreements tied to the commitment of funds issued by the City and Housing Authority nearly two years ago. Specifically, after receiving the pre -loan commitment letter from the City and Housing Authority on June 20, 2017, the Developer secured their entitlements from the City's Planning Commission on November 27, 2017 and then worked to secure all of their necessary financing and funding for the construction and operation of the Project. The Developer worked with City staff to apply for Affordable Housing and Sustainable Communities (AHSC) Grant funds and on December 19, 2017, City Council adopted a resolution supporting Community Development Partners submittal of a funding application for the AHSC Grant Program in the amount not to exceed $6.7 million. However, the Developer's application was not successful. On July 2, 2018, the Developer submitted an application for competitive 9% Low -Income Housing Tax Credits. And in October 2018, the Developer was notified that they were pulled off a waiting list and approved for an award. Following their award of 9% Tax Credits, the Developer had secured all of their necessary financing and funding to develop the Project and must now close on their financing and pull their building permit before May 6, 2019. There are two Loan Agreements for this Project: one Housing Successor Agency Loan Agreement for the $4.7 million in LMIHAF funds and one City Loan Agreement for $1.3 million in Inclusionary Housing Funds. The Housing Successor Agency Loan Agreement is attached as Exhibit 3 and the City Inclusionary Housing Loan Agreement is attached as Exhibit 4. Both Loan Agreements have the following basic terms: 80A-2