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CITY OF GLENDALE, CALIFORNIA
REPORT TO THE JOINT MEETING: GLENDALE CITY COUNCIL AND
GLENDALE HOUSING AUTHORITY
AGENDA ITEM
Report: Approval to Appropriate $376,000 in Affordable Housing Funds in Support of Metro Loma Apartments, an Affordable Housing Project Located at 328 Mira Loma Avenue, Currently in Default and Under Threat of First Mortgage Foreclosure.
1. City Council Resolution of Appropriation in the Amount of $376,000;
2. City Council Motion Authorizing Release of Funds.
COUNCIL ACTION
Item Type: Action Item
Approved for March 4, 2025 calendar
EXECUTIVE SUMMARY
Metro Loma Apartments (Metro Loma) is an affordable rental housing, tax credit project located at 328 Mira Loma Avenue (Property). It is a 44-unit project consisting of 1 one- bedroom, 29 two-bedroom and 13 three-bedroom units along with one manager’s unit (Project). Rents in this Project are targeted at 30% to 60% Area Media Incomes.
Metro Loma has been in service since 2009. The Glendale Housing Authority owns the land and leases the Property to Metro Loma, LP. The Glendale Housing Authority has two residual receipts loans totaling $4,168,193 in second place. The County of Los Angeles (County) has a residual receipts loan in third place in the amount of $1,472,000. The first mortgage is held by California Community Reinvestment Corporation (CCRC). The balance of that loan currently is approximately $1.4M.
On December 11, 2024, CCRC, the senior lender on the Metro Loma Apartments Property, sent a letter informing interested parties, including the Glendale Housing Authority, that the borrower and lessee, Metro Loma LP, initiated a strategic default and stopped making first mortgage payments effective November 2024.
Metro Loma LP, its sponsor, Wentwood ORC Funds LLC, and its affiliate property manager, Westlake Housing LP, expressed their intent to sell all of their property holdings in California where possible, abandon all of their other properties in California, and exit the state.
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In response, CCRC issued a Notice of Default letter to Metro Loma LP on December 12, 2024. Shortly after, CCRC made contact with both Glendale and County housing staff, and since then, the parties have been collectively strategizing on how best to preserve and reposition the Project.
Rather than lose the Project and its affordability provisions through the foreclosure process, Glendale staff is proposing a two-step process to save the Project from foreclosure in order to preserve affordable units. The proposed first step is to cure most of the monetary/repair and maintenance loan defaults to then allow time to develop a coordinated strategy to stabilize the Project financially and secure a new owner.
To that end, staff is recommending authorization of $376,000 in funds to:
•pay the 5-months past due mortgage payments to CCRC, approximately $66,792.50;
•pay the next 5 mortgage payments through August 2025 (“Interim Period”), approximately $66,792.50;
•make immediate repairs needed at Metro Loma Apartments, approximately $217,000; and
•fund any interim needs yet to be identified in the amount of $25,415.
The source of the proposed funding is the City’s Affordable Housing Trust Fund account that is locally controlled, and is an allowable source of funding to preserve the Project. At this point, the funding would be a grant to the Project. If staff can formulate and negotiate a permanent solution to making the Project financially feasible and identify a developer to assume the Project, staff will explore including this grant, and any other assistance provided, as a loan to the Project, much like the existing Glendale Housing Authority residual receipts loans.
RECOMMENDATION
It is recommended that the Glendale City Council adopt a Resolution of Appropriation in the amount of $376,000 from the City’s Affordable Housing Trust Fund.
ANALYSIS
According to annual financial statements, Metro Loma Apartments has been losing money in recent years. In 2024, the Project had a negative cash flow of $200k. This is in part due to management not raising rents during or since COVID. It is also due to increased costs. An example is property insurance, which has nearly tripled in the past five years alone. Because of this negative cash flow, no immediate replacement buyer was identified by Metro Loma LP, leading to its decision to walk away from the Property via a strategic default, and opening the door to a potential foreclosure by CCRC.
Staff’s proposal is for the County to eventually share in the costs needed to cure some of the defaults, at a pro-rata basis tied to the size of the County’s loan to the Project versus Glendale’s loans. County staff has yet to formally fund the share Glendale staff proposes, but if they do, County staff have indicated that they cannot do so immediately, thus, leading to this request and recommendation for full City funding now.
The account from which an appropriation is requested is the City’s Affordable Housing 3{{section.number}}1
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Trust Fund, comprised of in-lieu fees paid by developers under the City’s Inclusionary Zoning Ordinance (Chapter 30.35 of the Glendale Municipal Code (GMC)). Pursuant to GMC Section 30.35.060, the money in this fund must be used exclusively for housing projects which target extremely low, very low, low, and moderate income households, with no additional restrictions.
If the City Council approves appropriation of this funding, it will allow CCRC, Metro Loma LP, Glendale, and the County time to negotiate a permanent solution, which could include restructuring of loans, lease terms, rent targeting, and cost savings to make the Project financially feasible. Moreover, the funding will be contingent upon terms and conditions approved by the City Manager and City Attorney sufficient to ensure that the foreclosure process would not be perfected during this Interim Period.
STAKEHOLDERS/OUTREACH
Not applicable at this time.
FISCAL IMPACT
Approval of this action will cost $376,000, which was not included in the FY 2024-25 budget. Due to the fact that this funding will be considered a grant to the Project until a final solution can be attained that would preserve the Project, staff is proposing the use of the Affordable Housing Trust Fund’s fund balance for this purpose, as outlined below.
This funding is designated for affordable housing purposes, however it is flexible in that it does not mandate any additional restrictions or affordability covenants. This will allow staff to fund this first step in an effort to prevent perfection of foreclosure on the Property, while staff works to develop a long term solution.
Requesting Appropriation
Amount From (Account
String)
To (Account String) Funding Source
$376,000 24214-2090-CDD-
0000-P0000
43112-2090-CDD-
0020-P0000
Affordable
Housing Trust
Fund
ENVIRONMENTAL REVIEW (CEQA/NEPA)
The action of appropriating funding to attempt to preserve affordability of the already- existing Project is exempt from further environmental review under the California Environmental Quality Act ("CEQA") pursuant to Title 14 of the California Code of Regulations ("CEQA Guidelines") for all of the following reasons: 1) the activity will not result in a direct or reasonably foreseeable indirect physical change to the environment under CEQA Guidelines Section 15060(c)(2) because the Project is already built, the funding will go to curing monetary and routine maintenance/repair loan defaults, and any maintenance or repair work will undergo independent CEQA review at the time if/when such repairs are proposed; 2) the activity is not a project under CEQA Guidelines Section 15060(c)(3) and 15378(b)(4) because it constitutes the creation of government funding 4{{section.number}}1
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mechanisms or other governmental fiscal activity that does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment; and 3) the activity is covered by the common sense exemption that CEQA applies only to projects which have the potential for causing a significant effect on the environment, and here, it can be seen with certainty that there is no possibility that the activity may have a significant effect on the environment per CEQA Guidelines Section 15061(b)(3).
CAMPAIGN DISCLOSURE
This item is exempt from campaign disclosure requirements.
ALTERNATIVES TO STAFF RECOMMENDATION
Alternative 1: The City Council may approve the Resolution of Appropriation as set forth in this report.
Alternative 2: The City Council may reject the appropriation of funding and allow the Project to be foreclosed upon by the first mortgage lender, which will very likely result in the loss of all affordability covenants governing the Project.
Alternative 3: The City Council may consider any other alternative not proposed by staff.
ADMINISTRATIVE ACTION
Submitted by:
Bradley Calvert, Director of Community Development
Prepared by:
Peter Zovak, Assistant Director, Community Development Department Mike Fortney, Deputy Director, Community Development Department Pam Jackson, Housing Coordinator, Community Development Department Approved by:
Roubik R. Golanian, P.E., City Manager
EXHIBITS/ATTACHMENTS
None.