COUNCIL AGENDA ITEM NO. 2
Meeting Date: May 9, 2006
Subject/Title: Approve a Resolution approving and authorizing the execution
of a Loan Agreement by and between the Redevelopment Agency of the City of
Brentwood, City of Brentwood and Mercy Housing California XII and approving
a loan in the amount of $600,000.00 to assist in the construction of Villa
Amador, a 96-unit multi-family apartment complex located at the northeast
corner of Sand Creek Road and Shady Willow Lane
Prepared by: Donald Kwong, Senior Redevelopment Analyst
Submitted by: Howard Sword, Community Development Director
Approve the Resolution and authorize the City Manager to execute a Loan
Agreement by and between the Redevelopment Agency, the City and Mercy
Housing California XII for the development of Villa Amador, a 96-unit
multi-family apartment project located at Sand Creek Road and Shady Willow
Lane in an amount not to exceed $600,000.
Ordinance 756 and 790 were adopted by the City Council on September 9, 2003
and January 11, 2005 creating the City of Brentwood Affordable Housing
Program. The program was set up to support the availability of housing
opportunities for low and moderate income residents within the community.
The Ordinance created a “Housing Trust Fund” through the payment of
“in-lieu” fees by developers.
The Villa Amador project received a Conditional Use Permit from the City of
Brentwood Planning Commission and Design Review approval and Mitigated
Negative Declaration for the project on January 21, 2003 for a 96-unit
multi-family housing project; and on April 6, 2004, received a one-year
extension of the Design Review approval, and on April 5, 2005 received a
second extension for two years that expires on January 21, 2007.
On January 6, 2005 the Housing Subcommittee recommended that staff request
the reservation of Housing Trust Funds in an amount not to exceed $600,000
for Mercy Housing California XII as matching funds for the development of
the Villa Amador project.
On January 11, 2005 the City Council approved the reservation of $600,000 in
Housing Trust Funds for this project.
On July 26, 2005, City Council approved project priorities to be funded by
the Housing Trust Fund and the top priority was to fund units for lower
The project, owned by Mercy Housing California XII, was originally approved
by the Planning Commission in January of 2003 for the development of a
96-unit multi-family housing complex on the northeast corner of Sand Creek
Road and Shady Willow Lane. Mercy Housing California XII is a non-profit
developer located in West Sacramento, California and has been in business
for 23 years. They currently own and operate 27 housing units in Brentwood
(Green Valley Apartments) and 5,253 housing units throughout California.
Mercy Housing California XII is requesting a loan from the City in an amount
not to exceed $600,000 from the City’s Housing Trust Fund and in an amount
not to exceed $1,400,000 from the Redevelopment Agency of the City of
Brentwood for a total loan amount of $2,000,000 towards a portion of the
development fees for the project.
The terms of both of the Promissory Notes for the City and the Agency are
Term: 55 years
Interest: 3% simple interest per annum from the date of disbursement
Security: Deed of Trust, assignment of rents and a security agreement and
Repayment: So long as the Mercy Housing California XII owns and operates the
project in compliance with the affordable housing covenants and the
Agreement is not in default, the entire principal and interest of the Note
shall by due and payable in full upon the 55th anniversary of both Notes.
Mercy Housing California XII received approximately $12,500,000 in funds
from the State of California Housing and Community Development to fund
predevelopment and construction costs, $2,000,000 in funds from Contra Costa
County/HOME and $15,500,000 in funds from the 4% Tax Credit Allocation
Committee from the State of California for the remainder of construction
costs for the project.
Mercy Housing intends to increase the affordability component of the project
through restricting 61 units as rental housing for very-low income families
and 33 units for extremely-low income families. 25 units must be set aside
for agricultural workers in compliance with the Joe Serna Jr. Farmworker
Grant Program. Two units will be available as Managers’ unit.
Ordinance 790 Section 17.725.007 states that the “Funds shall be disbursed
at the discretion of the City Council for the purpose of assisting in the
construction of very low, low, and moderate-income Dwelling Units, or
helping with other affordable housing opportunities.” This request for funds
for the Villa Amador project complies with the Ordinance for the expenditure
of the Housing Trust funds.
This project represents the power of leveraging the City’s Housing Trust
Fund to create more affordable housing than could be created by merely
enforcing the Ordinance’s requirement of ten percent (10%). Furthermore,
affordable rental units can be counted towards the City’s compliance of
housing requirements mandated by HCD and ABAG as well as meets the City’s
Housing Element goals. This also fulfills the desire of the City Council to
use the Housing Trust Fund to create new units for families in the lower
The Agency and City Loans shall be disbursed in two disbursements: one
disbursement of $200,000 from the Agency, and the City and Agency
disbursement of the remainder simultaneously. The disbursement shall be used
for development costs and shall not exceed $2,000,000 total.
The cost of the project to the City Housing Trust Fund is $600,000 and will
be funded by the City’s Housing Fund 265. This amount is budgeted for fiscal
year 2005/06, but is not expected to be expended in the current fiscal year.
It is anticipated to be expensed in fiscal year 2006/07. The City Housing
Trust Fund is stable and healthy and can financially support the Mercy
Housing California XII Villa Amador project.
Loan Agreement with attachments
RESOLUTION APPROVING AND AUTHORIZING THE EXECUTION OF A LOAN AGREEMENT
BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF BRENTWOOD, THE CITY OF
BRENTWOOD AND MERCY HOUSING CALIFORNIA XII, AND APPROVING A LOAN IN THE
AMOUNT OF $600,000.00 TO ASSIST IN THE CONSTRUCTION OF VILLA AMADOR, A
96-UNIT MULTI-FAMILY APARTMENT PROJECT LOCATED ON THE NORTHEAST CORNER OF
SAND CREEK ROAD AND SHADY WILLOW LANE
WHEREAS, Mercy Housing California XII ("Developer") has purchased that
approximately 8 acre parcel located on the northeast corner of Sand Creek
Road and Shady Willow Lane in the City of Brentwood (the "Property").
WHEREAS, Developer plans to construct a 96-unit multi-family affordable
apartment project known as Villa Amador (the "Project") on the Property in
accordance with the following City approvals, as may be amended or extended:
Design Review 01-43 and Conditional Use Permit 02-17, approved by the
Planning Commission on January 21, 2003, by Resolution No. 05-23, and
extended until January 21, 2007.
WHEREAS, the Project is categorically exempt from the provisions of the
California Environmental Quality Act, Public Resources Code section 21000,
et seq. ("CEQA") pursuant to CEQA Guidelines, California Code of Regulations
WHEREAS, the City has adopted an Inclusionary Housing Ordinance that
established a Housing Trust Fund, in which in-lieu fees from implementation
of the ordinance are deposited. Section 17.725.007 of the Brentwood
Municipal Code provides that monies from the Housing Trust Fund shall be
disbursed at the discretion of the City Council for the purpose of assisting
in the construction of very low-, low- and moderate-income dwelling units.
WHEREAS, in order to assist in the construction of the affordable Project,
which will increase the City's supply of low-income housing, the City
desires to loan Developer the amount of $600,000.00 from its Housing Trust
Fund pursuant to the terms set forth in the Loan Agreement between the
Agency, the City of Brentwood and Developer attached hereto (the "Loan
Agreement"). The terms include the recordation of affordability covenants to
ensure the long-term affordability of the Project.
NOW, THEREFORE, BE IT RESOLVED that the City Council of Brentwood,
California hereby approves the loan of $600,000 from the City’s Housing
Trust Fund to Developer pursuant to the terms of the Loan Agreement attached
hereto and authorizes and directs the City Manager to execute the Loan
Agreement, subject to any minor conforming, technical or clarifying changes
approved by the City Attorney. The City Council further authorizes the
Executive Director to take all actions necessary to carry out the Loan
Agreement, including the execution of any attachments to the Loan Agreement,
subject to any minor conforming, technical or clarifying changes approved by
the City Attorney, and any other documents necessary to carry out the
provisions of the Loan Agreement.
PASSED AND ADOPTED this 9th day of May, 2006, by the following vote: