James Wong, Senior Project Manager April 23, 2018 CITY COUNCIL Loan Agreement for Rehabilitation of Villa Los Robles 473 N. Los Robles Avenue James Wong, Senior Project Manager April 23, 2018

Villa Los Robles 473 N. Los Robles Ave

Recommendation Finding of categorical exemption for rehab projects under CEQA Approve budget appropriation of $1,050,000 in Housing Successor and HOME funds to rehab Villa Los Robles project Approve key business terms of Rehab Loan Agreement w/ owner Villa Los Robles Partners LP

Background Villa Los Robles, 8-unit affordable rental project at 473 N. Los Robles Ave Developed in 1992 w/ tax credits, two State housing loans, and City redevelopment housing loan Restricted to low & very low income families w/ initial income < 60% AMI, two units restricted at 35% AMI 7 three-BR & 1 two-BR units, total 26 persons housed 26-year old wood-framed building w/ capital needs including dry rot, termite & rust damage, and worn/life-exhausted components

Background Sewer lateral break in 2004 caused ongoing financial drag on the project: a) hard debt payments on the State CalHFA loan that was modified to finance repairs, b) near depletion of replacement reserves. Small project: > Lack of economies of scale constrains cash flow, financially challenging to sustain. > Comparative disadvantage refinancing/tax credit re-syndication to raise funds for project rehab. Project cash flow expected to improve after 2032 when state CalHFA loan is paid off, freeing up $11k annually for property maintenance and reserves

Key Terms of Rehab Loan Agreement City deed of trust loan NTE $1,050,000 ($651k Housing Successor and $399k HOME – these funds are required to be expended per State/Federal law) No-interest annual payments from available net cash flow (“residual receipts”), 55-year loan term Rehab scope: 1) Address capital needs & extend building useful life, 2) upgrade worn or life-exhausted components, 3) install energy efficiency improvements, 4) augment replacement reserve. Comply with all applicable City policies, including local hiring and minimum wage New 55-year City covenant to year 2073 (adds 26 yrs)

Benefits of Villa Los Robles Serves larger families Stable affordable housing has helped families attain educational goals - At least one family member has graduated from college, and another is enrolled Small project has integrated well into the neighborhood Important to preserve small infill affordable rental projects as they have become difficult to develop and finance.

Villa Los Robles 473 N. Los Robles Ave