TO: Board of Supervisors
FROM: Ryan J. Alsop, County Executive Officer
REPORT BY: Jennifer Palmer, Director of Housing & Homeless Services
SUBJECT: Resolution re: Our Town St. Helena Project
RECOMMENDATION
title
Adopt a Resolution authorizing an amendment to loan documents with Our Town St. Helena, waiving the application fee and loan modification fee and allow funds from an existing predevelopment loan to Our Town St. Helena to remain with the Project, remove obligation of the developer regarding the revised loan balance, and terminate the loan balance promissory note. (Fiscal Impact $68,828 Expense; Affordable Housing Fund; Budgeted; Discretionary.)
body
BACKGROUND
Napa County receives funds under its Affordable Housing and Incentives ordinance (County Cod Chapter 18.107) and implements resolutions to further the development of affordable housing. On March 16, 2016, Our Town St. Helena, a nonprofit public benefit corporation (“Developer”) applied for $280,000 in predevelopment funding for an affordable housing project of 8 units, located at 684 McCorkle Avenue in St. Helena (“Project”). The Project assisted eight families of low and very low income to build and own their homes utilizing a “sweat equity” model of construction, which requires a significant commitment by the engaged prospective homeowners.
By Resolution 2016-44, the Board of Supervisors approved a predevelopment loan for the project and authorized preparation of loan documents memorializing the transaction. The Developer then closed on the mortgages with the selected families and initiated construction. Due to favorable interest rates on the individual mortgages from USDA, the applicants needed less assistance than anticipated to qualify for their final mortgages. Once construction of the units was complete and financing had been provided to the eligible purchasers, the final accounting from the Developer showed that Fifty-Nine Thousand Eight Hundred Fifty ($59,850) dollars of the original loan did not roll over to the eligible purchasers. While these funds were spent on the construction of the units and the units could have supported this debt, it was decided at the time of closing the financing for the eligible purchasers not to include this remaining amount in the debt assumed by the purchasers.
As a result, in May of 2019, the Developer requested that, rather than being returned to the County, the unused value of the original loan that did not go to the homeowners stay in the Project until the Developer was successful in purchasing a second property for development of additional affordable housing. The Board approved this request by Resolution 2019-17 and loan documents were drafted and executed evidencing the revised loan balance. Since that time, the concept for purchasing a property for additional units has been abandoned due to rising construction, interest, and land costs. Developer is requesting to amend the Loan Agreement to acknowledge the use of the original loan amount, remove the obligation of the Developer regarding the revised loan balance of Sixty-Eight Thousand Eight Hundred Twenty Eight dollars ($68,828), made up of the principle loan balance of Fifty-Nine Thousand Eight Hundred Fifty dollars ($59,850) plus accumulated 3% simple interest of Eight Thousand Nine Hundred Seventy Eight dollars ($8,978), and terminate the promissory note.
Requested Action
Adopt a Resolution authorizing amendment of loan documents with the Developer, waiving the application and loan modification fees, allowing funds from an existing predevelopment loan to remain with the Project, remove obligation of the Developer regarding the revised loan balance, and terminate the loan balance promissory note.
FISCAL & STRATEGIC PLAN IMPACT
|
Is there a Fiscal Impact? |
Yes |
|
Is it currently budgeted? |
Yes |
|
Where is it budgeted? |
Fund 2080 |
|
Is it Mandatory or Discretionary? |
Discretionary |
|
Discretionary Justification: |
There is no mandate to allow the unallocated portion of the predevelopment loan funds to remain with the Project and/or terminate the loan balance promissory note. |
|
Is the general fund affected? |
No |
|
Future fiscal impact: |
None |
|
Consequences if not approved: |
Our Town St. Helena will have an unsecured outstanding predevelopment principal loan balance of $59,850 which will continue to accrue interest at 3% simple until repaid. |
ENVIRONMENTAL IMPACT
ENVIRONMENTAL DETERMINATION: The proposed action is not a project as defined by 14 California Code of Regulations 15378 (State CEQA Guidelines) and therefore CEQA is not applicable.