SUBJECT: APPROVAL OF A CHANGE IN THE SOURCE OF FUNDING FOR AN ACQUISITION, CONSTRUCTION AND PERMANENT LOAN IN AN AMOUNT NOT TO EXCEED $7,240,416 TO ROEM DEVELOPMENT CORPORATION, OR ITS DESIGNATED AFFILIATE, FOR THE DEVELOPMENT OF THE CHERRYVIEW SENIOR APARTMENTS, LOCATED AT 5067 ALMADEN EXPRESSWAY

COUNCIL DISTRICT: 9

SNI Area: None

RECOMMENDATION

It is recommended that the City Council adopt a resolution approving a change in the source of funding for a loan of up to $7,240,416 to ROEM Development Corporation, or its designated affiliate, from the Extremely Low-Income Housing Reserve Fund (ELI), to the 20% Low- and Moderate-Income Housing Fund, for the acquisition, construction and permanent financing of the Cherryview Senior Apartments, a 126-unit senior rental development located at 5067 Almaden Expressway.

BACKGROUND

Through Resolutions No. 71314 and No. 71369, adopted on November 26, 2002 and December 17, 2002, respectively, the City Council approved a commitment for a conditional grant of up to $13,240,416 from the ELI Housing Reserve Fund for the Cherryview Senior Apartments. In January 2003, based on budget reductions and other proposals included in the Governor’s FY 2003-2004 budget, the Redevelopment Agency notified the Housing Department that, pending adoption of a State budget, not all ELI funds previously anticipated would be provided to the Housing Department.

ANALYSIS

The total cost to acquire the property and construct the improvements is currently estimated to be $23,299,505. On March 26, 2003, the California Debt Limit Allocation Committee (CDLAC) awarded a tax-exempt bond allocation of $8,000,000 to this project. The bond amount will be paid down to approximately $3,700,000 at the permanent phase. Additionally, it is anticipated that the Sponsor will receive approximately $6,134,919 in Low Income Housing Tax-Credits.

The tax-exempt bond allocation awarded to this project from CDLAC is contingent upon the project closing the construction financing within 90 days of the March 26, 2003 allocation date or June 26, 2003. As a result, City Council action is required at this time to authorize replacing $7,240,416 of the previously approved ELI funds with 20% Low and Moderate Income Housing funds. As part of the City funding, Affordability Restrictions with a 55-year term will be recorded against the property. Such Affordability Restrictions may be subordinated as permitted by State Law.

Pursuant to the Delegation of Authority, the City Manager will approve the specific business terms of the conditional grant.

COST IMPLICATIONS

Funding for the loan is available in the FY 2002-2003 20% Low and Moderate-Income Housing Budget. This funding is consistent with the Council approved Budget Strategy Memo, adopted on February 4, 2003 and the priorities for available housing funding approved by the City Council at its March 25, 2003 meeting.

PUBLIC OUTREACH

The Planning Commission recommended approval of the PD rezoning at its meeting of November 12, 2002. The City Council approved the Planning Commission recommendation at its November 19, 2002 meeting. The public also had an opportunity to speak on this project at the two City Council meetings on November 26, 2002 and December 17, 2002.

RELOCATION

None required.

COORDINATION

This report has been prepared by the Housing Department in coordination with the Office of the City Attorney.

CEQA

Negative Declaration (PDCSH-02-032)

LESLYE CORSIGLIA

Director of Housing