Reso 2006-058 - Laserfiche WebLink

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Project Description Under the DDA, the Developer or its affiliate will lease the Property from the Agency and will renovate and convert the Property into a 58-unit apartment complex with all units affordable to Very Low Income households. There will be 65 studios, two one-bedroom units, and one two-bedroom unit. The afford ability of the housing units will be governed by a regulatory agreement between the Developer and the Agency and will be restricted for 55 years. The rents for the affordable units will be based on the area median income for Alameda County (adjusted for household size), as follows: 7 units based on 30% of area median income (AMI), 6 units based on 35% of AMI, 34 units based on 40% of AMI, and 20 units based on 45% of AMI. There will be one unrestricted resident manager's unit. All units will contain a kitchen and bathroom. On-site parking will be provided in a secured ground level parking garage and exterior surface parking (collectively the "Project"). B. Agency Responsibilities The Agency's responsibilities are as follows: Since acquiring the Property in September 2005, the Agency has incurred approximately $165,000 in tenant relocation costs and $139,000 in planning costs including architectural services, financial consulting, legal, structural engineer and contractor cost estimates. The Agency will not receive any repayment of these costs. The Agency will lease the Property to the Developer for a term of 75 years. The rent for years 1-55 of the lease will be the lesser of $100,000 per year (increasing by $2,500 per year) or 75% of Net Cash Flow. Net Cash Flow is defined as Net Operating Income less partnership management and asset management fees. If the Developer agrees to extend the Regulatory Agreement for the remainder of the lease term (years 56-75) the lease rent will continue as described above. If the Regulatory Agreement is not extended, the rent will be 10% of the appraised fair market value of the Property. This report assumes that Mercy Housing, as a nonprofit whose purpose is to provide affordable housing, will extend the Regulatory Agreement and continue to operate the project with the rent restrictions. The Agency will provide a Predevelopment Loan to the Developer in the amount of $727,000 for architectural fees, planning fees, and various other soft costs for predevelopment activities. This loan will be repaid without interest when the Project's construction loan is funded. In order to assist with capital funding required to renovate and convert the Property to the proposed apartment complex, the Agency will provide the Developer a loan in the amount of $584,000. If there are eligible cost overruns, the Agency loan can be increased by up to $300,000. Therefore, the maximum Agency loan would be $884,000. The loan will not accrue interest. Repayment of the principal amount of the loan will be due at the end of the 55-year term.