Housing Authority Memorandum
TO: HONORABLE MAYOR AND DATE: APRIL 5, 2022
HOUSING AUTHORITY MEMBERS
FROM: OFFICE OF HOMELESS SOLUTIONS WARD: 2
SUBJECT: MODIFICATION TO LOAN DOCUMENTS WITH WAKELAND ENTRADA LP FOR THE ENTRADA AFFORDABLE HOUSING DEVELOPMENT AND PARTIAL RELEASE OF RESOLUTION NO.2, HOUSING COOPERATION LAW AGREEMENT ISSUES:
Approve a Modification to Loan Documents with Wakeland Entrada LP for the Entrada affordable housing development and a Partial Release of Resolution No. 2, Housing Cooperation Law Agreement.
RECOMMENDATIONS:
That the Housing Authority:
Approve the Modification to Loan Documents with Wakeland Entrada LP for the Entrada affordable housing development; Authorize the Executive Director, or designee, to execute the Modification to Loan Documents with Wakeland Entrada LP, including making minor and non-substantive changes as necessary; Authorize a Partial Release of Resolution No. 2, Housing Cooperation Law Agreement; and Authorize the Executive Director, or designee, to execute the Partial Release of Resolution No. 2, Housing Cooperation Law Agreement, including making minor and non-substantive changes as necessary.
BACKGROUND:
On February 6, 2018, the Housing Authority approved a Disposition, Development and Loan Agreement (DDA) with Wakeland Entrada LP for the development of a 65-unit (64 affordable housing units and one manager’s unit) affordable housing community consisting of studios and one, two, and three-bedroom apartment units (Entrada Housing Project). Eight of the total units will be reserved for Permanent Supportive Housing (PSH) Program recipients. The Project will also include a neighborhood flex space that can be programmed to benefit the surrounding neighborhood.
The goal of the project is to create a model community that can be used as a template for future development opportunities within the Chicago-Linden area, on smaller-infill parcels.
The DDA included the following provisions:
A $4 million Housing Authority loan bearing 3% simple interest that will be repaid with residual receipts (profits above operating expenses for the Project) over a 55-year period.
Loan proceeds will be used to acquire property and pay for soft and hard construction costs for completion of the Project.
The project will contain 64 affordable housing units that will be reserved for families at between 30% of Area Median Income (AMI) to 60% of AMI.
Eight (8) units will be reserved for use as Permanent Supportive Housing for persons earning at-or-below 30% of AMI and who require supportive services.
Loan repayment to begin when the Project is occupied (at Certificate of Occupancy).
Loan will mature in 55-years, and the units will remain affordable for the same period.
DISCUSSION:
Wakeland Entrada LP (Developer) is in the process of closing on financing for the development of the project, which includes California Tax Credit Allocation Committee (TCAC) funding. The Developer has requested the following revisions to the City’s loan documents through a Modification to Loan Documents (Attachment A), which would revise the Housing Authority’s DDA, Deed of Trust, Promissory Note and Regulatory Agreement.
Activity
Previous Requirement
Revised Requirement
Project Description and Unit Mix: Bedroom types
Development of studios, one-, two- to three- bedrooms units Development of one-, two- and three-bedroom units.
Project Description: Neighborhood Flex Space
Development to include a neighborhood flex space
Provide a description of the neighborhood flex space to include providing space for the surrounding neighborhood to use for programming needs.
Activity
Loan Document Requirements
Revised Loan Document Requirements
Project Description: Number of Residential Buildings
11 residential buildings
5 residential buildings, one community center building and one neighborhood flex space.
Lenders’ Residual Receipts
The Lender's Share of Residual Receipts, as defined in the Note The Pro Rata Share shall be determined by calculating the percentage resulting from dividing the amount of the Loan funds disbursed to the Developer in accordance with the Loan Agreement, by the total of the sum of all subordinate loans for the Project The Lender's Share of Residual Receipts, as defined in the Note, will be 50% of Residual Receipts, and Section 4(iv) of the Note is revised accordingly. In calculating the Housing Authority's Share of residual receipts, subordinate debt will include the loan, any HCD financing, and any other financing payable from cash flow to a public entity.
Maturity Date of Loan
Term is no later than 2075
Term is no later than 2079
Capital and Operating Reserves Caps
Capital Replacement Reserve cap of $250 and Replacement Reserve cap of an initial amount equal to three (3) months of the projected annual Operating Expenses for the Development or in such lesser amount as allowed by the senior lender or investor Allow Capital and Operating Reserves Caps to be exceeded as required by the Project's tax credit investor or permanent lender Schedule of Performance
Reflects project milestones from 2018 to 2021
Update schedule to reflect project milestones from 2018 to 2023 Project Budget
Reflected development costs in 2018
Updated project budget to reflect current development costs On December 15, 2009, the former Redevelopment Agency and Housing Authority approved transferring properties owned by the City and the former Redevelopment Agency that were acquired through the Targets of Opportunity Program, Neighborhood Stabilization Program, and HOME Investment Partnerships Program to the City’s Housing Authority. This action was formalized through Resolution 2 and the Housing Cooperation Law Agreement, which required that when these properties were disposed of for affordable housing purposes the Housing Authority would record covenants, conditions, and restrictions on these properties to ensure they remain available at an affordable housing cost. Since the Housing Authority has a recorded Regulatory Agreement recorded against the Entrada property to ensure the affordable housing community remains affordable for a 55-year period, the Developer is requesting the Housing Authority to release Resolution No. 2, Housing Cooperation Law Agreement from the property.
STRATEGIC PLAN ALIGNMENT:
The development of the Entrada affordable housing community supports Strategic Priority 2 – Community Well-Being and Goal 2.3. – Strengthen neighborhood identities and improve community health and the physical environment through amenities and programs that foster an increased sense of community and enhanced feelings of pride and belonging citywide.
This project algins with each of the Cross-Cutting Threads as follows:
Community Trust – The City of Riverside has identified eight priority development areas to meet the greatest needs of residents in the City. Priorities are based on responses to the 2020-2021 Community Survey conducted by the City through Community Ward Meetings, Post Card Surveys, and online. The information gathered in specific focus groups and interviews with various organizations and service providers in the housing and community development field identified affordable housing as a top priority.
Equity – Former Redevelopment Housing funds provides critical priority for the funding to ensure all eligible persons receive equitable access to housing and services and are served with dignity, respect, and compassion regardless of the circumstances, ability, or identity.
Fiscal Responsibility – There is no fiscal impact to the City General Fund associated with this item. The Housing Authority was able to utilize former Redevelopment Housing funds for the construction of extremely low to low-income housing to create economic stability for low-income City residents.
Innovation – Riverside is inventive and timely in meeting the community’s changing needs and prepares for the future through collaborative partnerships such as partnerships with affordable housing developers and neighborhood groups.
Sustainability & Resiliency – Riverside is committed to meeting the needs of the present without compromising the needs of the future and ensuring the City’s capacity to persevere, adapt and grow during good and difficult times alike.
FISCAL IMPACT:
The total fiscal impact is unknown at this time. This action is the reduction of the annual lenders’ share of residual receipts from 100% of residual receipts to 50% as required by the TCAC and the State of California’s Housing and Community Development program guidelines, which will reduce the City’s share of residual receipt payments from 100% to 50%.
Prepared by: Michelle Davis, Housing Authority Manager
Certified as to
availability of funds: Edward Enriquez, Chief Financial Officer/Treasurer Approved by: Lea Deesing, Assistant City Manager
Approved as to form: Phaedra A. Norton, City Attorney
Attachments:
Modification to Loan Documents
Partial Release to Resolution 2 Housing Cooperation Law Agreement Modification to Loan Documents with Wakeland Entrada LPPage 5