BusDev Highlights 2006 0309 - Laserfiche WebLink

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• Agency. Key deal points include the approximately $5 million in total subsidy that MHC is seeking from the Agency and the annual operating subsidy cap that the City intends to fund over a 30-year period. The loan to MHC will be deferred at 3% annual interest for 55 years with residual receipt repayment. The Agency will cap its annual operating subsidy to what is reflected in MHC's financial pro forma that shows the Year 1 cap at $62,000 and increasing to a cap of $359,000 in Year 30. The annual operating subsidy over a 30 year period will be the City's contribution to maintain the project and is not expected be repaid by MHC. MHC is also requesting to borrow about $555,000 from the Agency through a predevelopment loan agreement to cover necessary predevelopment soft costs until it receives its construction loan. MHC will repay the Agency at 3% interest through its construction loan prior to the start of construction expected in Fa1UWinter of 2006. Tom Liao also requested that the Committee give direction to the City Manager to reimburse the project architect up to $25,000 for architectural services related to necessary planning/entitlement approvals that MHC must receive from the City in order to apply for State low income housing tax credits in July 2006. This $25,000 is part of the $555,000 predevelopment loan and will be repaid under the predevelopment loan agreement. Mayor Young and Councilmember Stephens indicated they were in support of the City Manager advancing the $25,000 to the project architect. Staff will plan to take the DDA and predevelopment loan agreement for City Council consideration and approval on April 17, 2006. Mayor Young asked MHC what investment it would be making in the project. MHC noted that it originally had about a $1.1 million developer fee of which it would be putting $300,000 back into the project to assist with covering any development cost overruns and that it assumes risks on construction and operations as well as for tax credit investors. The City Manager added that the $13 million estimated total project cost did not really include any contribution from MHC but from other sources. Councilmember Stephens asked for more information on MHC's loan terms. The City Manager noted that MHC would be on the hook to repay the Agency the $5 million it borrowed plus compounded interest after 55 years. Hanson Hom added that this project is not currently showing positive cash flows so repayment may not be likely. Councilmember Stephens stated that he valued affordable housing that looked nice, but was trying to understand the economics of the project to ensure it would be viable in the long term because the Islander Motel has been such along-standing problem property. 3. Discussion Regarding Former Hudson Lumber Property Reuse Concepts (400 Hudson Lane) Hanson Hom brought forth for the Committee's attention and discussion possible land use options for the former Hudson Lumber site as well as traffic impacts from these options (see attachment). The two options discussed are allowed under the General Plan: one was for retail including a home improvement center and the other one was light industrial use. Hanson Hom noted that there were no formal proposals to date for the site. Councilmember Stephens stated that the home improvement center seemed like a viable option. Councilmember Stephens said the key problem to be solved on this site was the railroad tracks and looked forward to future recommendations by City staff to address it. Hanson Hom added that