Fremont City Council Meeting: 12/02/25 07:00 PM
3300 Capitol Avenue Div/Dept: Housing
Fremont, CA 94538 Category: Agreements and Contracts
SCHEDULED
Sponsors:
COUNCIL STAFF REPORT (ID # 5584) DOC ID: 5584
Updated: 11/24/2025 1:47 PM by Dina Lewis Page 1
PICKERING PLACE LOAN EXTENSION – Adopt a Resolution Authorizing the City Manager to Extend the Term of Existing City Loan Agreement with Pickering Associates, L.P., an Affiliate of MidPen Housing and Making Findings of CEQA Exemption
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: MidPen Housing (MidPen), a 501(c)(3) non-profit organization, currently owns and manages Pickering Place through its affiliate Pickering Associates, a California Limited Partnership. The City received a request from MidPen to extend the term of its loan which matures January 1, 2026. Staff recommends Council approval of MidPen’s request.
BACKGROUND: Located at 20 West Pickering Avenue in Fremont, Pickering Place is a 43-unit existing affordable housing development, originally opened in 1997 using tax credit financing, funding from the Redevelopment Agency of the City of Fremont (Agency), and a conventional bank loan. The City’s original loan amount was $1,954,045, bearing 3% compounded interest, repayable from residual receipts received from rents and operations.
The loan has accrued $2,396,777 of interest, totaling $4,350,822 of outstanding debt, as of November 30, 2025.
The development provides 1-, 2-, 3-, and 4-bedroom apartments for families earning between 30% and 60% of Area Median Income (AMI). The Regulatory Agreement regulates rents, occupancy, and income levels until the later of July 1, 2094, or repayment in full of principal and all interest due.
DISCUSSION/ANALYSIS: In July of 2025, MidPen notified the City of its interest in extending the City loan term before the January 1, 2026, maturity date, and provided a formal written request to the City.
Highly Competitive Financial Markets: With its request, MidPen also provided an operating budget, a Capital Needs Assessment, an 11-year cash flow proforma, MidPen’s updated rent policy and rent schedule, current rent roll, and amended Limited Partnership Agreement(s). Resyndication provides an infusion of new equity into the project to address any capital improvement needs or major system replacement of an aging property. It also provides an opportunity for an affordable property owner to pay off or restructure its existing loans. MidPen explained that due to highly competitive financial markets, it has been unable to resyndicate or refinance the property. MidPen believes that the financial landscape for resyndication is improving, and that the project is likely to undertake a resyndication in the next few years.
Council Staff Report (ID # 5584) Meeting of December 2, 2025 Updated: 11/24/2025 1:47 PM by Dina Lewis Page 2
Standard Financial Model of Affordable Housing Projects: The typical financial model of an affordable project prioritizes long-term affordability and operational viability over generating sufficient cash flow to fully pay off all lenders. It is common for soft lenders such as the City to not be fully repaid at the end of the initial loan term. Soft (or deferred) loan repayments are contingent on excess cash flow which is the surplus cash that remains after paying operating expenses, debt service obligations, and other reserve contributions. Due to regulatory constraints on rents and escalating operational expenses, MidPen is currently not able to generate sufficient cash flow to meet the scheduled loan repayment obligation.
Five-Year Extension Consideration: All documentation submitted by MidPen 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 MidPen’s request to extend the term of the loan agreement is reasonable and recommends staff approval.
Staff recommends that the City Council approve a five-year extension to the term of the loan agreement, from January 1, 2026, to January 1, 2031. The extension would provide MidPen the necessary time to complete a complex resyndication process under more favorable market conditions while still meeting the City’s objective for the property to be financially and physically sustainable over the long term. Staff will monitor progress to ensure that MidPen is taking proactive steps to finalize their resyndication plan.
FISCAL IMPACT: No additional City funding is provided as part of this loan extension. 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 January 1, 2031, at which time the full loan amount (principal plus accrued interest) is due and payable.
ENVIRONMENTAL REVIEW: The City’s approval of the extension of loan term 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 have a significant adverse effect on the environment, directly or indirectly.
ATTACHMENTS:
• Draft Resolution MidPen Pickering Loan Extension
RECOMMENDATION: Adopt a resolution authorizing the City Manager, or designee, to amend the loan agreement and other implementing documents and take such other actions as required to extend the term of the loan agreement to January 1, 2031.