Fremont City Council Meeting: 11/18/25 07:00 PM
3300 Capitol Avenue Div/Dept: Housing
Fremont, CA 94538 Category: Agreements and Contracts
SCHEDULED
Sponsors:
COUNCIL STAFF REPORT (ID # 5561) DOC ID: 5561
Updated: 11/13/2025 11:40 AM by Lucia Hughes Page 1
LOAN SUBORDINATION AGREEMENTS – Authorize the City Manager, or designee, to execute Subordination Agreements related to the refinancing of Irvington Terrace Family Apartments, an affordable housing development Contact Persons:
Name: Lucia Hughes Joel Pullen
Title: Housing Manager Community Development Director
Div/Dept: Housing Community Development
Phone: 510-494-4506 510-494-4436
E-Mail: [email protected] [email protected]
Executive Summary: Authorize the City Manager, or designee, to execute Subordination Agreements related to refinancing Irvington Terrace Family Apartments, 4109 Broadmoor Common, Fremont, CA, to subordinate the City’s affordable housing loans to BRIDGE Regional Partners and Irvington Development Group, L.P. (BRIDGE).
BACKGROUND: Irvington Terrace Family Apartments (Irvington Apartments) is a 100-unit affordable family housing property located at 4109 Broadmoor Common, Fremont, CA. In October of 2005, the Redevelopment Agency of the City of Fremont (Agency) entered into the First Amended and Restated Regulatory Agreement with BRIDGE for Irvington Family Apartments. The Agency provided $5,100,000 loan to BRIDGE Regional Partners, Inc. to acquire the property, and an additional loan of $4,075,000 to Irvington Development Group, L.P., to develop the property. Funds included Redevelopment Agency Low- and Moderate-Income Housing Funds, HOME Investment Partnership Program funds, Community Development Block Grant funds and funds received by the Agency pursuant to the City’s Inclusionary Housing Ordinance. BRIDGE has since paid down $448,415 in toward the development loan. The loans have accrued $5,452,048 interest, totaling $14,178,633 of outstanding debt, as of October 31, 2025. The Regulatory Agreement regulates occupancy and income levels for up to 99 years.
The development, which opened in 2007, consists of two buildings, with three levels of residential stories above parking. The development provides 1-, 2- and 3-bedroom apartments for families earning between 30% and 50% of Area Median Income (AMI).
BRIDGE is a 501(c)(3) non-profit organization.
DISCUSSION/ANALYSIS: In May of 2025, BRIDGE notified the City of its interest in refinancing the Irvington Apartments to complete needed repairs to the property, payoff an existing California Community Reinvestment Corporation (CCRC) mortgage, cover cost of the prepayment premium and fund costs of a new loan in the amount of approximately $4,830,000 from Berkadia Commercial Mortgage LLC (Berkadia). The property also has existing Multi-family Housing Program (MHP) funding from the California Department of Housing and Community Development which will be restructured because of the new Berkadia loan.
Loan subordination is a legal process wherein a lender, in this case, the City of Fremont, agrees to make its claim on the property “junior” to the new lender’s claim. This is critical, Council Staff Report (ID # 5561) Meeting of November 18, 2025 Updated: 11/13/2025 11:40 AM by Lucia Hughes Page 2
especially in affordable housing, when there are usually multiple lenders financing a project.
Lenders are assigned a lien position based on the order of recording. In the event of foreclosure, proceeds from the sale of the property would be used to pay off debt in the order of lien priority. Currently, the City is in the third lien position after CCRC and State MHP respectively. When a new loan is obtained (in this case a loan from Berkadia), and the old loan is paid off (in this case to CCRC), the City’s interest in the property moves up to the second position. Because most lenders refuse to make a loan with the most favorable terms unless their loan is in the first position, and because the City has an interest in preserving the physical condition of this affordable housing property, staff is recommending that the City Council approve the subordination of its interest in the property to Berkadia and State MHP to revert its lien position to third.
Given the age of the property, many major systems as well as the unit interiors are now in need of rehabilitation or replacement. The renovations will replace a variety of aging systems and equipment in both the exterior and interiors. Some of the items to be addressed include upgrades to building exteriors (lighting, landscaping, site work, dry rot repair and painting); plumbing and mechanical upgrades (heating, ventilation & air conditioning improvements, and replacements of hot water heaters); elevator repairs; and interior improvements such as cabinet and appliance replacements.
BRIDGE has explored other avenues to fund the rehabilitation, such as financing from State tax exempt bonds and State tax credits, however these financing sources have been extremely competitive in recent years. BRIDGE provided a formal written request to the City, along with an operating budget, a Capital Needs Assessment, a 15-year cash flow proforma, audited financial statements, and a copy of their Loan Portfolio Restructuring application to the California Department of Housing and Community Development for the City’s consideration. All documentation was reviewed and analyzed by the City’s financial consultant, Mosaic Urban Development, a firm that specializes in affordable housing finance.
The consultant has determined that BRIDGE’s subordination request is reasonable and recommends staff approval.
Staff recommends that City Council approve subordinations of the City’s affordable housing loans to BRIDGE Regional Partners and Irvington Development Group, LP to Berkadia Commercial Mortgage, LLC as the Senior Lender, as well as to the California Department of Housing and Community Development, the lien holder in the second lender position.
FISCAL IMPACT: No additional City funding is provided as part of this subordination request. The City will continue to receive its share of residual receipts of varying amounts from the project which will be used to pay down the loan and interest. The loan term expires on December 1, 2026, at which time the full loan amount (principal plus accrued interest) is due and payable.
ENVIRONMENTAL REVIEW: The City’s approval of the refinancing is exempt from the California Environmental Quality Act (CEQA) pursuant to, without limitation, and each as a separate and independent basis, CEQA Guidelines Sections 15301 Existing Facilities, 15061(b)(3) Review for Exemption, and/or 15378(b)(2), (4), and/or (5) Project. The action is a governmental fiscal or administrative action to refinance an existing multi-family development which will have no potential to adversely affect the environment, directly or indirectly.
Council Staff Report (ID # 5561) Meeting of November 18, 2025 Updated: 11/13/2025 11:40 AM by Lucia Hughes Page 3
ATTACHMENTS: None.
RECOMMENDATION: Approve loan subordination agreements related to the refinancing of Irvington Terrace Family Apartments and authorize the City Manager, or designee, to execute: (1) Subordination Agreement between Berkadia Commercial Mortgage, LLC and the City of Fremont, as successor agency to the Redevelopment Agency of the City of Fremont; and (2) Subordination Agreement between the City of Fremont, as successor agency to the Redevelopment Agency of the City of Fremont, Irvington Development Group, L P., BRIDGE Regional Partners, Inc., and the Department of Housing and Community Development, a public agency of the State of California.