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CITY OF SAN LEANDRO STAFF REPORT DATE: November 29, 1999 TO: John Jermanis, City Manager APPROVED AND FORWARDED TO CITY COUNCIL John Jermani City Manager rn 0 FROM: Don Fleming, Interim Development Services Director BY: Debbie Potter, Redevelopment Administrator Neusa R. Pollard, Housing Specialist V--- SUBJECT: Resolution Approving Loan Agreement Between the City of San Leandro and Citizens Housing Corporation for the Use of Home Funds for Acquisition of a 91- Unit Apartment Building, and Authorizing the City Manager to Execute the Necessary Documents to Loan the Home Funds to Citizens Housing Corporation for 15370-15375 Tropic Court; Assesssor's Parcel Number 412-0006-006-02 SUMMARY AND RECOMMENDATION Staff recommends that the City Council approve an additional allocation of $300,000 of federal HOME funds to Citizens Housing Corporation (CHC) and authorize the City Manager to execute the attached loan documents for acquisition of the Las Palmas apartments. The additional HOME funds are needed to cover the higher costs of alternative financing and to avoid tenant relocation. Approval of this request will increase the total HOME allocation to $1,050,000. BACKGROUND In May 1999, the City Council approved an allocation of HOME funds in the amount of $750,000 to be used toward the acquisition costs of the Las Palmas apartments located at 15370-15375 Tropic Court. CHC had planned to utilize the HOME funds in conjunction with 4% housing tax credit financing to acquire and rehabilitate the property and convert all 91 apartments into affordable housing units. Over the past six months, CHC has done its due diligence toward obtaining the necessary financing. Part of its efforts included surveying the residents to determine whether a sufficient number of in - place tenants had incomes which would qualify the building for the tax credit financing. The results of the survey indicated that 40% the tenants have incomes higher than the allowed threshold (above 60% of the Area Median income, or above $39,420 for a family of four). If CHC were to 1431.1