Approval of an Amended and
Restated Master Loan Agreement and
Related Documents with the Burbank
Housing Corporation – Phase I
City Council Meeting
January 14, 2025
COMMUNITY
DEVELOPMENT
1 BACKGROUND - BURBANK HOUSING
CORPORATION PARTNERSHIP
COMMUNITY
DEVELOPMENT
1. Presented the 25-Year partnership during two study sessions in August and November 2024
2. Several funding sources via the City of Burbank and the Housing Authority were utilized for BHC affordable housing developments with a specific financing structure
3. The partnership has created long-term affordability for 326 Units
4. Also provided resident services:
- Activities
- Family care resources
- Childcare centers
To continue the BHC mission, consideration this evening is to amend the Master Loan Agreement with BHC – Phase I.
2 BHC’s Proposal:
1. Global accounting and oversight changes
2. Flexibility to apply to other funding sources to finance projects
3. Allows the release of properties from the MLA to create more housing with new funding sources
4. No more evergreen provision. However, BHC will keep affordability for a minimum of 55 years.
3 BURBANK HOUSING CORPORATION
MASTER LOAN AGREEMENT PROPOSAL
PROPOSED AMENDMENTS TO
MASTER LOAN AGREEMENT
Financial
Amendments
-
Such as Loan
Terms
Administrative
Amendments
-
Such as Budget and
Reporting
Requirements
Policy
Amendments
-
Such as Resident
Programming
Categories of Proposed Changes –
Continuing the Conversation through Phases
4 PHASE I STUDY SESSON - OVERVIEW
5 BHC’s Proposed Four Terms for Phase I:
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 City Proposed Interest Term (0nly Difference):
1. Reset Interest to Zero.
2. New note balances as of 12/31/24 with accrued interest. No new interest to accrue or to be collected on outstanding balance.
3. Maintains affordable units through security of the Deed of Trust. Limits future leveraging with the affordability covenant. Improves cash flow.
4. BHC Concerns: Eliminates new financing. BHC needs positive balance sheets to secure new financing and grow the organization.
November 26, 2024
1. INTEREST TERM
Resetting balance of each loan to the beginning principal amount setting interest at zero percent and forgoing all past/outstanding and future interest.
2. FORGIVENESS TERM
-Housing Authority Note: Forego 1/55th of the principal balance of each loan that used Authority funds each year provided BHC is in compliance with all the agreements (especially the Affordability Restrictions) of each property.
-City Note: Reset the term of the City Notes to the date funds that were dispersed until the 15-year, as required under HOME regulations, and forgive a portion of principal amount on the initial 15-year terms of each original note with one exception described in No. 5 below. This proposed term also removes the “Residual Receipts” payment requirement.
3. TERM OF NOTES
Reset the term of the Housing Authority Notes to an additional 55 years to correspond to the Affordability Period.
6 PHASE I CONSIDERATION
EXISTING PROPERTIES ONLY
SUMMARY OF PROPOSED TERMS
4. TERM OF UNIT AFFORDABILITY
Reset affordability restrictions (the Affordability Period) to greatest feasible time and no less than 55 years on Authority and City loans. The new affordability covenants will terminate on April 1, 2080 for all of the units.
5. SPECIFIC PROPERTY MODIFICATON – FAIRVIEW NOTES
-Housing Authority Notes for three Fairview properties (Projects No. 1, 7, 8a) shall be modified in preparation for a future development project. Notes are not forgiven by annual payments; rather the notes are extended for 55 years. The entire balance is deferred and due at the end of 55 years. -City Notes are not shortened to reflect 15 years. Instead City Notes are extended 55 years.
However, if the Fairview properties are not released from the Master Loan Agreement by Council action within five years, then the Fairview Notes shall be changed administratively to include the MLA Phase I terms consistent with other notes.
7 PHASE I CONSIDERATION
EXISTING PROPERTIES ONLY
SUMMARY OF PROPOSED TERMS - CONTINUED
RECOMMENDATION AND CONCLUSION
1. It is recommended that the City Council approve two resolutions: One from the Housing Authority and one from the City, authorizing an Amended and Restated Master Loan Agreement for Phase I along with related documents.
2. This approval will enable BHC to maintain favorable financial standing, supporting their ongoing efforts and mission to provide affordable housing within the community
3. Staff and BHC will return at later dates to present future phases and any proposed changes for the City Council’s review and consideration. 8 CONTACT
Maribel Leyland
Housing Authority Manager
818-238-5180
[email protected]
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