CITY COUNCIL STAFF REPORT
Meeting Date: February 2, 2026
TO: THE HONORABLE MAYOR AND CITY COUNCILMEMBERS
TITLE: ADOPT RESOLUTION NO. __-26 AUTHORIZING THE CITY
MANAGER TO ENTER INTO A CONSENT TO COLLATERAL
ASSIGNMENT OF AN EXISTING GRANT AGREEMENT FOR THE
GRAYSON CREEK APARTMENTS AT 100 CHILPANCINGO
PARKWAY
SYNOPSIS
Bridge Housing has requested the City of Pleasant Hill enter into a collateral assignment of an existing grant agreement for the Affordable Housing project - Grayson Creek Apartments at 100 Chilpancingo Parkway. The collateral assignment would provide that current annual grant payments, that the City has already committed to paying, would continue to the subsequent owner that would continue to provide affordable housing should the current owner default on the loan and the lender is forced to foreclose. The assignment would not result in any additional funding from the City; thus, Staff recommends that the City Council adopt the proposed resolution authorizing the City Manager to execute the collateral assignment.
DISCUSSION
Background
The Grayson Creek Apartments was completed in 2002. Prior to development of the project, the former Pleasant Hill Redevelopment Agency agreed to provide a loan to help facilitate the project. The original loan from 1998 was $4,500,000 with a maturity date of 55 years. At that time, the City was also subordinate to the primary loan for the project.
The agreement was amended in 2001 when it was split into a grant and loan. The loan was in the amount of $1,005,000, and is repayable out of residual receipts (i.e., net proceeds) from the affordable housing project, with a maturity date of 55 years after recordation of the Certificate of Completion for the project (2057). The Grant was in the amount of $6,815,000, and the Developer executed a note stating that the Grant would only have to be repaid in the event of a default under the Grant and Loan Agreement. As part of this agreement, the City continued to agree to subordinate its loan and regulatory agreement to a permanent loan from CalHFA in the original principal amount of $5.7 million, and a second loan from HCD in the original principal amount of $4,074,510. The Developer has been paying down the CalHFA loan consistently for several years, and it currently has a remaining balance of approximately $2,570,463. The HCD loan is paid out of residual receipts, and as a result very little principal has been paid down, and the loan has been accruing interest. The current outstanding principal and interest on the HCD loan is $5,774,215.40.
At the November 17, 2025, City Council meeting, the Council authorized the City Manager to enter into a new subordination agreement due to the property owner’s desire to refinance the existing loans to make funds available for capital improvements at the property.
As part of the refinancing process, the new lender, Berkadia/Freddie Mac, is requiring that the Grant Agreement, which provides an operating subsidy to the project, between the borrower and the City be collaterally assigned to the lender; this is a common lending requirement for affordable housing operating subsidies, such as HUD Section 8/project-based vouchers.
Analysis
As part of the refinancing, Bridge Housing is now requesting the City enter into a Consent to Collateral Assignment of an existing Grant Agreement for the Grayson Creek Apartments.
Under the current agreement with Grayson Creek Apartments, the City is providing a grant of $235,000 on an annual basis (until 2031) to the project that helped to subsidize 70 affordable units onsite. Approval of the request would ensure that these payments would be made to the subsequent owner of the project in the event that the current owner defaults on the loan and the lender is forced to foreclose. Staff notes that the lender must continue to provide affordable units to be eligible to receive the $235,000 annual payment.
The refinancing will also update the previously approved subordination agreements; however, the only changes to that document would be a change of dates and updated interest amounts.
The City Attorney has reviewed the request and determined that, due to the minor nature of the amendments to the previously approved subordination agreement, the City Council review and approval is not necessary, as it is substantially the same document, except for new dates and updated interest amounts.
Staff has reviewed the requests, with assistance from legal counsel, and believes that the request is necessary to allow the refinancing process to continue that would allow capital improvements to the site. As noted in November 2025, the City has not had any prior issues with Bridge Housing and its loan standing; accordingly, given Bridge Housing's extensive portfolio of affordable housing projects, Staff believes there is minimal risk of entering into the Consent to Collateral Assignment of the Grant Agreement.
FISCAL IMPACT
None, no additional funds are requested as part of this request.
PUBLIC CONTACT
Public Contact was made through posting of the City Council agenda on the City’s official notice bulletin board, at the Pleasant Hill Senior Center, and at the Pleasant Hill Police Department. The agenda and staff report are posted on the City’s web page.
RECOMMENDED CITY COUNCIL ACTION
Adopt the attached resolution authorizing the City Manager to execute a collateral assignment to a subsequent lender in the event of a loan default of the current primary lenders for the Grayson Creek Affordable Housing Apartments at 100 Chilpancingo Parkway.
ALTERNATIVES TO RECOMMENDED ACTION
Do not adopt the resolution and provide direction to staff.
ATTACHMENT(S)
Attachment A: Proposed Resolution
Attachment B: Proposed Consent to Collateral Assignment of Grant Agreement Attachment C: November 17, 2025, City Council Staff Report (subordination agreement attachment included)
Attachment D: Resolution No. 51-25
Prepared by: Troy Fujimoto, City Planner
Approved by: Ethan Bindernagel, City Manager