RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF EAST PALO ALTO
AUTHORIZING THE CITY MANAGER TO NEGOTIATE AND EXECUTE
AMENDMENTS TO EXISTING CITY LOAN AND REGULATORY AGREEMENTS
RELATING TO THE REFINANCING OF THE NUGENT SQUARE APARTMENTS WHEREAS, in 2003, the Former Redevelopment Agency of the City of East Palo Alto (the "Former Agency") provided a loan of $1,100,000 Nugent Square Partners, L.P., a California limited partnership (the "Partnership") for the development of the Nugent Square Apartments, a 32-unit apartment complex affordable to very low and extremely low-income households ("Project"); and
WHEREAS, Eden Housing Inc., a California nonprofit public benefit corporation ("Eden") and East Palo Alto Community Alliance and Neighborhood Development Corporation, a California nonprofit public benefit corporation ("EPA CAN DO" and collectively with Eden, the "Developer") are the general partners of the Partnership; and WHEREAS, the City of East Palo Alto ("City") elected to be the housing successor to the Former Agency and succeeded to all of the rights and obligations of the Former Agency; and
WHEREAS, in 2020 the City approved a refinancing of the permanent loan financing the Project that included extending the affordability restrictions benefiting the City by five years; and
WHEREAS, the Developer is now proposing to recapitalize the Project using Low Income Housing Tax Credits and additional funds from the County of San Mateo that will provide funding for rehabilitation and upgrades to the Project that will require that the Project be transferred from the Partnership to a new limited partnership of which Eden and EPA CAN DO will be the general partners; and
WHEREAS, the City and Developer have negotiated mutually beneficial terms for the Project’s refinancing including:
1. The City’s regulatory agreement will be extended to provide a 55-year term from the date of the refinance.
2. The existing City Loan term will be extended from a 40-year term to a 55-year term from the date of the refinance.
3. The interest rate on the City loan will be increased from 1% to the current applicable federal rate, which is projected to be 3.14%.
4. The new limited partnership owning the Project will extend EPA CAN DO's current commercial lease for an additional 20 years, until 2060 at a nominal rent of $1 per year.
5. The Developer will pay the City's legal costs to process this transaction in an amount not to exceed $50,000.
NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF EAST PALO ALTO hereby authorizes the City Manager to:
1. Negotiate and execute amendments to the City’s existing Loan and Regulatory Agreements to effectuate the transfer of the Nugent Square Apartments to a new limited partnership and the refinancing of the Nugent Square Apartments, in forms approved by the City Attorney.
2. Negotiate and execute subordination agreements subordinating the City's loan and regulatory agreement to construction and permanent financing, in a form approved by the City Attorney
3. Execute such other documents and to take such other actions necessary to complete the refinancing of the Project, subject to the approval of the City Attorney.
PASSED AND ADOPTED this 20th day of September 2022, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
SIGNED:
Ruben Abrica, Mayor
ATTEST: APPROVED AS TO FORM:
James Colin, City Clerk Valerie J. Armento, Interim City Attorney