SUBJECT:     APPROVAL OF A FUND RESERVATION FOR CONSTRUCTION FINANCING TO ROEM DEVELOPMENT CORPORATION, OR ITS DESIGNATED PARTNERSHIP, FOR THE DEVELOPMENT OF PHASE II OF THE PROPOSED MONTE VISTA GARDENS SENIOR APARTMENTS - - ADDENDUM ITEM

 

COUNCIL DISTRICT:  5

SNI AREA:  680/East Valley Communities

 

 

REASON FOR ADDENDUM

 

City Council actions and recommendations contained in this report are needed immediately so that the project sponsor can meet the California Tax Credit Allocation Committee’s application deadline of June 15, 2001 for the competitive 9% tax credit financing.  Last minute negotiations kept these matters from coming to the Council at an earlier date.  

 

RECOMMENDATION

 

It is recommended that the City Council adopt a resolution approving an additional fund reservation of up to $565,000, for a total $2,514,000 commitment of City funding, to ROEM Development Corporation, or its designated partnership, for the development of the 49-unit Phase II of the Monte Vista Gardens Senior Apartments project with units affordable to low- and very low-income households on a 1.24-acre site located on the west side of South Capitol Avenue, north of Lombard Avenue.

 

BACKGROUND

 

On March 6, 2000, ROEM Development Corporation (ROEM) completed its NOFA Application to the Housing Department for the development of a second phase of the Monte Vista Gardens Senior Apartments project that will provide 48 one-bedroom units affordable to low- and very low-income seniors and one unrestricted two-bedroom manager’s unit. 

 

On March 21, 2000, the City Council adopted a resolution to approve business terms for an acquisition and predevelopment loan of up to $1,949,000 for the project.

 

The sponsor is seeking an additional funding commitment of $565,000 from the City as a result of increases in project costs. 

 

The sponsor will submit an application to the California Tax Credit Allocation Committee (TCAC) for an allocation of 9% tax credits on June 15, 2001.

 

ANALYSIS

 

The proposed project will be constructed on a 1.24-acre site located on the west side of South Capitol Avenue, north of Lombard Avenue.  The site is adjacent to the parcel on which the 144-unit Monte Vista Gardens affordable family project is currently under construction. 

 

The sponsor will be seeking permanent financing for the project from the 9% Low-Income Housing Tax Credit program.  The sponsor will apply for a 9% tax credit allocation on June 15, 2001.  Should the project receive an allocation, the sponsor would then secure construction and permanent financing commitments.

 

The sponsor intends to utilize this additional fund reservation for construction and permanent financing of the project.  This funding commitment is in addition to the existing City acquisition/ predevelopment loan of up to $1,949,000.  Recent updates of project costs indicated a shortfall of funding which necessitated this additional City funding. The Housing Department is recommending that the City provide a fund reservation of up to $565,000. Should the project receive an allocation of 9% tax credits, the sponsor anticipates that the project will require a City permanent loan of approximately $2,148,842, which equates to the current acquisition/ predevelopment loan of $1,949,000, the proposed fund reservation of $565,000 less an expected paydown on the City’s loan at permanent loan closing of $365,158.  When the sponsor secures all construction and permanent financing commitments, staff will return to the City Council for approval of City construction and permanent loan business terms.  

 

The attached fact sheets detail the proposed conditions for the City’s fund reservation.  The affordability mix shown in the fact sheets is based on the project utilizing 9% tax credits and conventional financing. 

 

PUBLIC OUTREACH

 

The sponsor hosted a neighborhood meeting on January 10, 1999 at Lyndale Elementary School.  Representatives from the office of Council District 5 and staff members from the City’s Planning Department were among the attendees. The sponsors presented site plans and described details of the proposed project.  The sponsors and Planning Department staff fully addressed all concerns raised by the neighborhood residents.

 

COORDINATION

 

Preparation of this memorandum was coordinated with the Office of the City Attorney.

 

COST IMPLICATIONS

 

The additional funds of $565,000, to be provided during the construction phase of the project, is available from the Housing Department’s Fiscal Year 2000-2001 budget.

 

CEQA

 

ND

 

 

LESLYE CORSIGLIA

Acting Director of Housing

 

Attachments

 

 

Monte Vista Gardens Senior Apartments, Phase II

Fact Sheet

 

Development Team

 

Developer:                                            ROEM Development Corporation

Architect:                                              James Guthrie and Associates

Contractor:                                           ROEM Builders

Property Manager:                                To be Determined

 

Project Characteristics

 

Project Location:                                  West side of South Capitol Ave. north of Lombard Ave.

Acreage:                                               1.24 acres

Council District:                                    5

Project Type:                                        Senior Rental

Group Served:                                      Very low-income households

Number of Units:                                  49 (48 very low-income; 1 unrestricted)

 

Bedroom Mix and                                                                                     1-Bedroom     2-Bedroom  

Monthly Rent:                                       VLI (45%AMI)                                    22

                                                            VLI (50%AMI)                                    26

                                                            Manager Unit Unrestricted                                        1

                                                                                                                                   

Other Amenities:                                   Elevator, furnished community room with community kitchen and entertainment room, laundry facility on each floor and landscaped courtyard.

 

Estimated Project Cost:                        $9,310,265

Cost Per Unit:                                       $190,005

Anticipated City Subsidy

   at Permanent:                                     up to $2,148,842

Anticipated City Subsidy

   per Unit at Permanent:                       $44,768                      

Anticipated Leverage Per Unit:              3.33 to 1         

Land Appraised Value:                         $1,960,000 (Cushman and Wakefield 1/28/00)

 

Fund Reservation Conditions:

 

  1. Borrower shall submit an application for 9% tax credits to the California Tax Credit Allocation Committee (TCAC) at the first funding round for which the proposed project is eligible.

 

  1. In the event the project does not receive an allocation of 9% tax credits from TCAC, the Borrower must provide an alternative financing structure that is acceptable to the Housing Department.

 

3.      The City’s future Permanent Loan commitment shall be subject to the City’s review and approval of Borrower’s project proforma and financing commitments.

 

4.      The City's future Permanent Loan commitment shall be contingent on the Borrower's ability to maximize all available financing sources, including senior permanent loan, tax credit equity and/or grants.

 

Planning Issues

GP Designation:                                    Medium Density Residential (8 DU/AC) 

PD Rezoning Status:                             Approved February 1, 2000

PD Permit Status                                  Approved

Building Permits:                                   Pending

Article XXXIV Status:                          Authority from Measure D (1994) is available

Toxics Issues:                                       Phase I completed on July 12, 1997 by ADCO Engineering, no further studies recommended.ther studies recommended.

Relocation Needed:                              None required for this site.

 

Estimated Project Development Timeline

 

June 12, 2001                                      Anticipated City Council Approval of Fund Reservation

 

June 15, 2001                                      Application for 9%Tax Credit Allocation

 

August 2001                                         Anticipated Announcement of 9% Tax Credit Allocation

 

November 2001                                   Anticipated Start of Construction                                 

 

November 2002                                   Anticipated Completion of Construction