PREPARED BY: ELIZABETH LOPEZ DATE OF MEETING: 09/05/2023
SUBJECT:
TITLE
CONSIDER ADOPTING RESOLUTION, AS HOUSING SUCCESSOR: (1) APPROVING AND AUTHORIZING AN EXTENSION OF THE EXISTING LOAN TO GIANT DEVELOPMENT, L.P., FOR THE GIANT ROAD APARTMENTS IN CONNECTION WITH OBTAINING A NEW FEDERAL LOW INCOME HOUSING TAX CREDIT AND ASSOCIATED FUNDING FOR THE PROJECT; (2) AUTHORIZING GIANT DEVELOPMENT II, LLC TO SERVE AS THE NEW GENERAL PARTNER TO THE LIMITED PARTNERSHIP; AND (3) AUTHORIZING THE CITY MANAGER TO EXECUTE A LOAN COMMITMENT LETTER AND OTHER DOCUMENTS RELATED TO THE EXTENSION OF THE LOAN
CEQA: This is not a project as defined by CEQA
Label
CITY MANAGER RECOMMENDATION
Recommendation
Adopt Resolution
Body
Compliance statement
Diversify and improve the quality of housing stock is an adopted policy items contained in the FY 2023-25 City Council Priority Workplan, effective May 1, 2023.
BACKGROUND
On September 28, 2004, the Redevelopment Agency of the City of San Pablo (the “RDA”) authorized an interest-free $500,000 loan for the Giant Road Apartments, an 86-unit affordable rental dwelling project (the “Project”). An additional interest-free $1,200,000 loan was authorized by the RDA on August 16, 2005, for a total Project loan of $1,700,000. Funding for the Project also included loans from the State Department of Housing and Community Development (“HCD”) and the County of Contra Costa (the “County”).
The Project loan is being repaid from residual receipts from the Project along with repayment of the loans from the County and HCD, all as provided in an Intercreditor Agreement dated July 1, 2009. The current Project loan from the RDA is to be repaid no later than August 16, 2060.
The Borrower is Giant Development, L.P., a California limited partnership. The general partner of Giant Development, L.P., is a California limited liability company owned and controlled by East Bay Asian Local Development Corporation (“EBALDC”), a California nonprofit public benefit corporation.
On February 1, 2012, the RDA was dissolved. The City of San Pablo, as the housing successor of the RDA, is now the entity entitled to repayment of the Project loan.
EBALDC is in the process of applying for a new Federal Low Income Housing Tax Credit for a resyndication at Giant Road. The purpose of this application is to substantially rehabilitate the property. The property needs major repair due to ongoing and pervasive water intrusion issues. This new funding would help maintain quality affordable housing in San Pablo and ensure its continuation for an additional 18 years.
As part of the recapitalization of the project, EBALDC has asked that the City of San Pablo extend the repayment term of its current loan for approximately 18 years by resetting the term to 55 years from the date of closing for the new Project funding. The new final repayment date for the Project loan would be 55 years from the date of closing. The extension would also reset the affordability covenants to 55 years from the date of closing for the new Project funding, effectively extending the affordable housing requirements for an additional 18 years.
With the recapitalization of the project, a new tax credit partnership will also be created and Giant Development II, LLC will serve as General Partner. This entity is to be controlled by EBALDC and its affiliates. The owner/borrower will still be Giant Development, L.P.
The Project loan documents and affordability covenants would be modified to provide for the extended terms and new tax credit partnership and for no other purpose.
FISCAL IMPACT
The fiscal impact of extending the term of the loan and affordability restrictions is that the deadline for complete repayment of the Project loan will be delayed by 18 years.
ATTACHMENTS
Att A - Resolution
Att B - Loan Commitment Letter