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REDEVELOPMENT AGENDA ITEM NO. 21

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 $1,400,000.00 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

RECOMMENDATION
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 on Sand Creek Road and Shady Willow Lane in an amount not to exceed $1,400,000.

PREVIOUS ACTION
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 Economic Development/Redevelopment Subcommittee recommended that staff request the reservation of Low and Moderate Income Housing Funds in an amount not to exceed $1,400,000 for Mercy Housing California XII as matching funds for the development of the Villa Amador project.

On January 11, 2005 the Agency Board approved the reservation of $1,400,000 in Low and Moderate Income Housing Funds for this project.

BACKGROUND
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 $1,400,000 loan from the Redevelopment Agency rather than the City’s Housing Trust Fund will assist the Agency in meeting its housing production goals.

The terms of both of the Promissory Notes for the City and the Agency are the same:

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 fixture filing

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.

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.

Proceeding with this project is consistent with the Redevelopment Plan and the Five-Year Implementation Plan to provide affordable housing. The project is located outside of the Merged Project Area and therefore the Agency will have the ability to count 47 units from this project towards its housing production goals for the Agency.

This project represents the power of leveraging the Agency’s Housing Fund to create more affordable housing than could be created by merely enforcing the Community Redevelopment Law requirement of fifteen percent (15%). 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.

FISCAL IMPACT
The cost of the project to the Agency is $1,400,000 and will be funded by the Agency’s Low and Moderate Housing Fund 302. 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 Low and Moderate Housing Fund is stable and healthy and can financially support the Mercy Housing California XII Villa Amador project.

Attachments:
Resolution
Loan Agreement with attachments

AGENCY RESOLUTION NO.
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 $1,400,000.00 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 section 15332.
WHEREAS, the Redevelopment Agency of the City of Brentwood (the "Agency") is carrying out the Merged Area Redevelopment Plan (the "Redevelopment Plan").
WHEREAS, the Agency has established a Low and Moderate Income Housing Fund for the Merged Project Area pursuant to Health and Safety Code Section 33334.3, and is authorized and empowered under the Community Redevelopment Law of the State of California, Health and Safety Code section 33000, et seq., and the Redevelopment Plan to use its Low and Moderate Income Housing Fund for the purpose of increasing the community's supply of low and moderate income housing.
WHEREAS, in order to assist in the construction of the affordable Project, which will increase the City's supply of low-income housing, Agency desires to loan Developer the amount of $1,400,000.00 from its Low and Moderate Income Housing Fund pursuant to the terms set forth in the Participation and 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 Redevelopment Agency of the City of Brentwood hereby approves the loan of $1,400,000 from the Agency's Low and Moderate Income Housing Fund to Developer pursuant to the terms of the Loan Agreement attached hereto and authorizes and directs the Executive Director to execute the Loan Agreement, subject to any minor conforming, technical or clarifying changes approved by the Agency General Counsel. The Redevelopment Agency 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 Agency General Counsel, 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:
 

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