BURBANK HOUSING
CORPORATION PARTNERSHIP –
MASTER LOAN AGREEMENT
STUDY SESSION – PHASE 1
City Council Meeting
November 26, 2024
COMMUNITY
DEVELOPMENT
1 CONTINUING THE CONVERSATION -
MASTER LOAN AGREEMENT PROPOSAL
COMMUNITY
DEVELOPMENT
August 13, 2024 Study Session Recap:
The 25-Year Partnership
Funding Sources and Financing Structure
Long-Term Affordability for 326 Units
Resident Services – Activity, Family Resource and Childcare Centers BHC’s Proposal for Consideration - Amend the Master Loan Agreement 2 PROPOSED AMENDMENTS TO
MASTER LOAN AGREEMENT
BHC’s Proposal:
Global accounting and oversight changes
Flexibility to apply to other funding sources to finance projects Allows the release of properties from the MLA to create more housing with new funding sources
No more evergreen provision. However, BHC will keep affordability for a minimum of 55 years.
3 PROPOSED AMENDMENTS TO
MASTER LOAN AGREEMENT
Financial
Amendments
Administrative
Amendments
Policy
Amendments
Categories of Proposed Changes –
Several Conversations and Phases
4 BHC’S PROPOSED TERMS –
EXISTING PROPERTIES/FINANCIAL TERMS
Current Master Loan
Agreement Terms
• Interest – 3% fixed
• Requires Residual Receipts
payments
• Term of Loans – 30 & 55 yrs
• Term of Affordability –
Perpetuity (“Evergreen”
provision; extended with
each new project), but no
less than 55 years
Proposed Master Loan
Agreement Terms
1. Interest – Reset to Zero
and forego all accrued
interest
2. Forego 1/55th of principal
each year; provided BHC is
in compliance
3. Term of Loans – Reset to
an additional 55 years after
approval of proposal
4. Term of Affordability –
Reset to greatest feasible
time; no less than 55 years
PHASE I
5 PROPOSED MASTER LOAN AGREEMENT
TERMS EXISTING PROPERTIES ONLY
1. Interest Term:
New note balances as of December 31, 2024, to include accrued interest. No interest will accrue or be owed on the new outstanding loan balance.
2. Forgiveness Term: Forego 1/55th of the outstanding loan balance each year provided BHC is in compliance with Agreements. Removes the “Residual Receipts” payment requirement.
3. Term of Loans: Reset the term of the loans to an additional 55 years.
4. Term of Affordability: Reset affordability restrictions to greatest feasible time and no less than 55 years.
These proposed MLA Phase I Terms have n o effect or financial impact to the City or Housing Authority.
PHASE I
6 PROPOSED MASTER LOAN AGREEMENT
TERMS EXISTING PROPERTIES ONLY
BHC Proposed Interest Term:
• Reset Interest to Zero
• Forgive Accrued Interest to date
Result: Positive balance sheets and
allows for new financing and future
leveraging of resources. Improves cash
flow.
City Concern: Maintain affordability if
BHC add liens that prevail above the
affordability covenant in the event of
foreclosure.
PHASE I
City Proposed Interest Term:
• Reset Interest to Zero
• New note balances as of 12/31/24 with
accrued interest. No new interest to accrue
or be collected on outstanding balance.
Result:
Maintains affordable units through
security of the Deed of Trust; limits future
leveraging with the affordability covenant.
Improves cash flow.
BHC Concerns: Eliminates new financing. BHC
needs positive balance sheets to secure new
financing and grow the organization.
7 NEXT STEPS
Consideration of MLA Phase I: December 10, 2024
Proposed Project Consideration: January/February 2025
MLA Future Phases: To Be Determined 2025
8 CONTACT
Maribel Leyland
Housing Authority Manager
818-238-5180
[email protected]
9