May 24, 2023
Ms. Sylvia Solis Daniels
Housing and Neighborhood Services Manager
City of San Marcos, CA
[email protected]
RE: Villa Serena Phase 2 - Request for $1,254,712 in roll-over savings and an additional New Loan of $689,691
Dear Ms. Daniels:
Thank you and the City of San Marcos for supporting the completion of Villa Serena Phase 1 (VS1).
Villa Serena Phase 2 (VS2) is now gearing up for the 9% tax credit application to the State of California in the second TCAC round (August 2023). In order to proceed, National CORE is respectfully requesting $1,944,403 in additional gap funding to be added to the long-term loan agreement (this is not a grant request).
Specifically, National CORE has identified several sources in cost savings which will be returned to the City of San Marcos as indicated below. We have also connected with the County of San Diego and they conceptually support the cost savings (a portion of which normally would be returned to the County) going back into VS2. The cost savings are approximately $1,254,712 indicated below.
In addition to the $1,254,712 in cost savings from VS1, VS2 will need an additional $689,691 and we are seeking the City’s support for the additional $689,691.
VS2 will need to boost the 9% tie-breaker in order to be competitive against other affordable housing projects within various cities with the County of San Diego. Additionally, we have experienced unprecedented construction cost increases as well as interest rate increases on the 30-year mortgage resulting in the need for a total of $1,944,403.
Savings identified as follows:
1) $165,168 – Undrawn from $1.6M City Loan
2) $364,544 –Project Cost Savings
3) $725,000 – CCRC Permanent Loan Increase
4) $1,254,712 – Cost Savings returned to the City
VS2, as with all other construction projects have seen rapid cost increases, For VS2, we have seen the following:
Labor, materials, and equipment increases;
Major supply chain issues with electrical switch gear, which has increased schedule and cost substantially;
Dry utility relocation and infrastructure work;
Storm drain infrastructure (underground tanks and other systems) have supply chain issues, which increased schedule and cost;
Hard dig condition (granite found on VS1 and VS2) adding time and cost
Please see attached the updated proforma for your review.
We are hopeful the City will be able to increase our loan agreement by the requested $1,944,403 and this will allow National CORE to make a competitive 9% application in August 2023.
Thank you, once again for our long-standing relationship and partnership to provide the highest quality affordable housing for seniors, veterans, families and for the unhoused of the City of San Marcos.
Sincerely,
John Seymour
Vice-President
National Community Renaissance