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<br />C~ <br />Proposed Disposition and Development Agreement (DDA) <br />with Mercy Housing California (MHC) for Islander Motel Proiect <br />I. Key Deal Points in DDA <br />a. Acquisition/rehabilitation of 68 affordable rental units (67 studios and 1 <br />manager's unit) <br />• 7 units @ 30% AMI (extremely low income) <br />• 60 units @ 35% to50% AMI (very low income) <br />b. Total Redevelopment Agency Subsidy/Loan -approx. $5 million <br />• Long-term loan <br />• $4.5 million for acquisition, $265K for development, $300K <br />contingency (e.g., cost overruns only if needed) <br />• Loan terms: deferred for 55 years at 3% annual interest with <br />residual receipts repayment <br />Annual Operating Subsidy <br />• Annual Cap for 30 years -Year 1 ($62K) through Year 30 <br />($359K) to cover 1% annual inflation rate gap between rental <br />income and operating expenses <br />II. Predevelopment Loan Agreement (separate from DDA) <br />• Short-term loan <br />MHC is requesting to bonow $554,787 from Redevelopment <br />Agency for necessary predevelopment soft costs until the <br />construction loan is approved (i.e., architecture/engineering, <br />fees/assessments, legal, tax credit application fee) <br />To be repaid to Agency at 3% interest from construction <br />loan when it is approved prior to the start of construction in <br />Fall/Winter 2006 <br />III. Request for Committee Approval <br />a. Allow City Manager to authorize up to $25,000 for architectural services <br />related to preparing planning/entitlement submittal to City for approval <br />prior to applying for low income housing tax credits in July 2006 <br />• This architectural work must begin ASAP because MHC must <br />have all its planning/entitlement approval prior to submitting a <br />low income housing tax credit application to State <br />Reimburses architect for work done from now until when City <br />Council approves the Predevelopment Loan Agreement and <br />DDA in April 2006 <br />This $25,000 is part of the $554,787 in predevelopment costs <br />and will be repaid by MHC under the Predevelopment Loan <br />Agreement <br />Bi~si~zess Develop~neiit Co~nhiittee (March 9, 2006) <br />