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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 Assign New Borrower / Lessee of Metro Loma Apartments, an Affordable Housing Project Located at 328 Mira Loma Avenue, and Appropriate Additional Affordable Housing Funds.
1. Housing Authority Motion Authorizing Executive Director to Execute Amendments to Ground Lease and Affordable Housing Agreement and Related Documents;
2. Housing Authority Motion Authorizing Executive Director to Execute New Loan Documents;
3. City Council Resolution of Appropriation in the Amount of $465,600; and
4. City Council Motion Authorizing Release of Funds.
COUNCIL ACTION
Item Type: Action Item
Approved for August 12, 2025 calendar
EXECUTIVE SUMMARY
Metro Loma, LP ceased making payments to the first lender, California Community Reinvestment Corporation (CCRC), in November, 2024. This action led to a default on the loan and a foreclosure process was initiated. To avoid foreclosure, on May 20 th, the Housing Authority authorized staff to purchase the note from CCRC.
Housing staff has been working with staff from The Los Angeles County Development Authority (LACDA) to address Metro Loma’s financial feasibility by funding reserves and immediate repairs, restructuring loans and terms to the Affordable Housing Agreement and related documents, and in the selection of a new borrower / lessee and property management company.
In order to complete the transfer from Metro Loma, LP to Linc Housing’s newly formed Linc 328 Mira Loma LLC, the responsibility of borrower / lessee, the Housing Authority’s Affordable Housing Agreement (AHA) and related documents, and the ground lease will require amendments. Additionally, two new loans will also need to be executed to guarantee the repayment of the Housing Authority’s additional funding. 12 25-87993
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Previously, the Housing Authority appropriated funds for immediate repairs to Metro Loma called out in the property conditions report. The additional dollars address repairs called out for over the next four years. Housing staff believes the developer fee of $300,000 is appropriate for the size and scope of the project and risk in the assumption of responsibility of a troubled asset.
If approved, Housing staff anticipates this will be the final action needed from the City Council and Housing Authority to transfer responsibilities of Metro Loma, LP to Linc Housing’s newly created entity, Linc 328 Mira Loma LLC and restore Metro Loma to a well maintained and financially feasible affordable housing project.
RECOMMENDATION
That the Housing Authority authorize the Executive Director to execute amendments to the AHA, Ground Lease, and related documents and execute new loans for the transfer of Metro Loma to Linc 328 Mira Loma LLC. Also, that the City Council adopt a Resolution of Appropriation in the amount of $465,600 from the City’s Permanent Local Housing Allocation (PLHA) fund.
ANALYSIS
Metro Loma is an affordable rental housing, tax credit project for lower income families located at 328 Mira Loma Avenue. The development consists of 44 units: 1 one-bedroom, 29 two-bedroom, and 13 three-bedroom units, along with one manager’s unit (the Project). Rents are targeted at households earning 30% to 60% of Area Median Income (AMI).
The Project has been in service since 2009. The Glendale Housing Authority (GHA) owns the land and leases the Property to Metro Loma, LP. Previously the GHA held two residual receipts loans totaling $5,037,355, currently in second lien position. LACDA holds a residual receipts loan in third position totaling $1,472,000. The first mortgage was held by CCRC, with a current loan balance of approximately $1.5 million. The Housing Authority now owns that note.
Housing and LACDA staff negotiated and executed an Option to Purchase Agreement with Metro Loma, LP to purchase their rights as borrower / lessee of Metro Loma for $100.
This agreement provides a commitment from Metro Loma, LP along with the current property management company, to continue to manage Metro Loma and remain in place as borrower / lessee and manager through August 15, 2025, to allow Housing and LACDA staff time to identify a new borrower / lessee.
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On May 20, 2025, the City Council and the Housing Authority authorized staff to acquire the note held by CCRC in order to avoid foreclosure of Metro Loma. The note was purchased on June 16, 2025. Concurrently, Housing and LACDA staff have been working to identify and secure a new developer / management company to assume the role and responsibilities of borrower / lessee and manager. Given the urgency, there was no time to do an open solicitation of developers. Instead, staff reached out to developers with recent experience in Glendale with a proven track record. After meeting with several developers, Linc Housing emerged as the best fit to assume the role of borrower / lessee and National CORE as the property management company.
Housing and LACDA staff recommend Linc Housing (Co-developer of Vista Grande Court and 515 Pioneer Drive) be selected as the new borrower / lessee and National CORE (also Co-developer of Vista Grande Court and 515 Pioneer Drive) the new management company.
The additional funding of $600,000 addresses additional repairs of $300,000 and a developer fee of $300,000. Previously, Glendale appropriated funds for immediate repairs called out for in a property condition report. However, Linc Housing rightfully pointed out that the same report also called for an additional $299,780 in repairs needed in years 1-
4. Given staff projections of negative cash flow in the first four years, staff believes it is necessary to appropriate the funds to cover these costs now.
The $300,000 developer fee (called out as Transaction Fee) will go to Linc Housing in exchange for assuming the risk and responsibility of borrower / lessee of a troubled asset.
Housing and LACDA staff agree that this is an appropriate size fee.
GHA’s proposed contribution is the prorata share of the current loans held by Glendale and LACDA. Glendale’s current loans equal $5,037,355 versus LACDA’s loan of $1,472,000. Based on this, Glendale’s prorata share of the additional $600,000 is 77.6%, or $465,600 and LACDA’s prorate share is 22.4%, or $134,400.
The chart below details both GHA and LACDA’s total financial contribution to Metro Loma, including the additional $600,000 currently requested from both LACDA and Glendale.
Total Glendale LACDA
100.00% 77.60% 22.40%
CCRC Loan Purchase $1,527,014 $1,527,014
PNA Reserve $540,000 $232,800 $307,200
Transition Reserve $100,000 $100,000
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Replacement Reserve $110,000 $85,360.00 $24,640.00
Operating Reserve - General $27,500 $21,340.00 $6,160.00 Operating Reserve - Expected
Deficit $160,000 $45,949.00 $114,051.00
Transaction Fee $350,000 $271,600.00 $78,400.00
Closing Costs & Contingency $40,500 $31,428.00 $9,072.00 Total $2,855,014 $2,215,491 $639,523
Glendale’s prorata share of funds ($465,600) would come from the City’s Permanent Local Housing Allocation fund. These funds can only be used for affordable housing projects and programs for lower income households.
In order to effectuate the transfer from Metro Loma LP to Linc 328 Mira Loma, LLC, and to restore Metro Loma as a financially feasible and well-maintained affordable housing project, staff is proposing the following changes to the Ground Lease, Affordable Housing Agreement (AHA) and related documents, as well as two new loans and a restructure of the loan previously owned by CCRC. Specific changes include:
The original ground lease, dated January, 2007, has a term of 99 years. Staff recommends this term remain in place with the original execution date, leaving approximately 80.5 years before expiration.
The original affordability covenant term was 55 years, which would have resulted in a market rate project of approximately 40 years. Staff recommends the affordability covenants remain in place during the entire term of the ground lease, similar to recent affordable housing projects in Glendale. The original affordability restrictions were based on both Low and Moderate Income Housing Asset Funds (LMIHAF) and 9% Tax Credit rents set by the Tax Credit Allocation Committee (TCAC). LMIHAF or State HCD rents, have historically been more restrictive than TCAC rents which are tied to HUD rent restrictions. AB 846 allows agencies to restrict rents to TCAC rents when a project is considered a troubled asset for 3 or more years and is being provided additional funds after January 2025. Staff recommends restricting rents to TCAC rents to allow for an increase in rents to those high and over-income residents at Metro Loma. CCRC’s loan, which the Housing Authority now owns, is a standard, amortized 15 25-87993
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loan with monthly principal and interest payments. Those payments represented nearly 70% of the negative cash flow in previous years. Staff proposes to convert this loan into a residual receipts loan similar to the way Glendale structures other loans to affordable housing projects in its portfolio in order to assist in the financial feasibility of Metro Loma.
Two additional loans from Glendale Housing Authority must also be executed in order to secure the additional funds Glendale has committed as well as the additional $465,600 staff is recommending. One loan, an Affordable Housing Trust Fund loan will be in the amount of $1,749,891. The second loan will be a Permanent Local Housing Allocation fund loan in the amount of $465,600. Staff proposes both loans be structured as residual receipts loans with simple interest of 3%.
One additional consideration staff requests from the Glendale Housing Authority is approval to give preference to over housed households (those that are below Glendale’s occupancy standards) and households that are rent burdened (paying more than 30% of income towards rent) to lease more appropriate size and income targeted units at Pioneer Village, whose tenant selection plan is currently being drafted.
With the approval of the transfer from Metro Loma LP to Linc 328 Mira Loma LLC the rights and responsibilities of borrower / lessee and transfer of current management responsibilities to National CORE, as well as the additional funding from Glendale of $465,600, staff believes this is the final action needed by the City Council and Housing Authority to ensure Metro Loma is restored to a financially feasible and well-maintained affordable housing project. Staff believes the final transfer can occur by or before September 15, 2025.
STAKEHOLDERS/OUTREACH
Not applicable at this time
FISCAL IMPACT
Approval of this action will cost $465,600 which was not included in the FY 2024-25 budget. Staff is proposing the use of the Permanent Local Housing Allocation fund balance as outlined below. This funding is designated for affordable housing purposes, including the preservation of affordable housing. As this is a local source of funds, there is no mandate for additional restrictions or affordability covenants. 16 25-87993
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Requesting Appropriation
Amount From (Account
String)
To (Account String) Funding Source
$465,600 24214-2280-CDD-
0000
43112-2280-CDD-
0020-P0000
Permanent Local
Housing
Allocation 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 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
Campaign Finance Disclosure Statement is attached as Exhibit 1.
ALTERNATIVES TO STAFF RECOMMENDATION
1. Reject the appropriation of funding and transfer of responsibility of borrower / lessee and direct staff to seek an alternative borrower / lessee and management team with different terms.
2. The City Council and Housing Authority may consider any other alternative not proposed by staff.
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ADMINISTRATIVE ACTION
Submitted by:
Bradley Calvert, Director of Community Development
Prepared by:
Michael Fortney, Deputy Director of Community Development/ Housing Peter Zovak, Assistant Director of Community Development Approved by:
Roubik R. Golanian, P.E., City Manager
EXHIBITS/ATTACHMENTS
Exhibit 1: Campaign Finance Disclosure
Exhibit 2: Draft Agreements & Loan Documents