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REQUEST FOR <br />COUNCIL ACTION <br />CITY COUNCIL MEETING DATE: <br />APRIL 4, 2011 <br />TITLE: <br />LOAN AGREEMENT WITH GARNSEY, LP - <br />326 SOUTH GARNSEY <br />z <br />CITY MANAGER <br />RECOMMENDED ACTION <br />CLERK OF COUNCIL USE ONLY: <br />APPROVED <br />? As Recommended <br />? As Amended <br />? Ordinance on 15' Reading <br />? Ordinance on 2nd Reading <br />? Implementing Resolution <br />? Set Public Hearing For_ <br />CONTINUED TO <br />FILE NUMBER <br />Authorize the City Manager, or designee, and Clerk of the Council to execute the attached loan <br />agreement with Garnsey, LP in an amount not to exceed $4,291,188, subject to non-substantive <br />changes approved by the City Manager and City Attorney. <br />DISCUSSION <br />The Neighborhood Stabilization Program (NSP) funds were allocated to localities to stabilize <br />neighborhoods that have been impacted by foreclosed or abandoned properties. These funds may <br />only be used for properties that have been foreclosed or are in the foreclosure process. The City <br />must spend a minumim of 25% or $2,500,000 on activities benefitting very low-income households <br />(50% AMI). On March 1, 2010, the City Council awarded Orange Housing Development <br />Corporation (OHDC), a non-profit 501(c)(3), and C&C Development (C&C), a for-profit developer <br />(Developer), the contract to implement the multi-family rental program funded by the Federal <br />Neighborhood Stabilization Program (NSP2). The approved contract allocated between <br />$2,500,000 to $6,100,000 for the multi-family rental program in order to fulfill the very-low income <br />requirement. <br />Pursuant to the March 1, 2010, contract award, the Developer proposes to use the NSP funds for <br />the acquisition of a multi-family complex at 326 South Garnsey. This activity is in compliance with <br />their contract and NSP regulations. The project consists of 26 two-bedroom units of which twenty- <br />five units will be rented to very low income families (at or below 50% of AMI) and the remaining unit <br />will be for an on-site manager. The maximum monthly rents will be $981. The Developer will be <br />obtaining other financing for the rehabilitation costs. The scope of work will be developed with City <br />staff and will be in accordance with all applicable building codes. The rehabilitation will include <br />sustainable and energy efficient features, if feasible. The loan will have a 0% interest rate and <br />repayments will be based on residual receipts. There will also be 55 year affordability convenants <br />placed on the property. For the financing purposes of this project, the Developer will form a <br />Limited Partnership named Garnsey, LP. <br />25E-1