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THE CITY OF ♦ L��S�4NTONC CITY COUNCIL AGENDA REPORT March 5, 2019 City Manager TITLE: ADOPT A RESOLUTION AUTHORIZING THE CITY OF PLEASANTON TO PARTICIPATE IN THE UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HUD) PUBLIC OFFERING AS PART OF THE SECTION 108 LOAN GUARANTEE ASSISTANCE PROGRAM TO CONVERT FROM AN INTERIM FINANCING TO A PERMANENT, FIXED RATE FINANCING AN EXISTING NOTE IN THE ORIGINAL AMOUNT OF $1,250,000, RELATED TO THE FINANCING OF THE AXIS COMMUNITY CLINIC EXPANSION PROJECT SUMMARY In 2015, the City of Pleasanton, who entered into a public participating jurisdiction (PPJ) agreement with the cities of Livermore and Dublin, was awarded HUD Section 108 Loan Program funding of $1,250,000 to finance activities related to the construction of a community health clinic for Axis Community Health located at 5925 West Las Positas Blvd. in Pleasanton. The loan, of which only $950,000 was utilized, is evidenced by a note with a variable interest rate for the 20-year term of the loan. HUD has announced plans for a public offering for the Section 108 Loan Guarantee Program that would allow for the refinancing of the note to convert from an "interim financing" (i.e. variable interest rate) to a permanent, fixed rate financing. The conversion to a fixed interest rate is anticipated to be beneficial to the City of Pleasanton particularly in the current increasing interest rate environment. RECOMMENDATION Authorize the City Manager to negotiate and execute related documents, agreements, and modifications related to the refinancing of the Section 108 Loan to convert from an interim financing to a permanent, fixed rate financing. FINANCIAL STATEMENT By participating in HUD's Public Offering scheduled for March 28, 2019, it is anticipated that the City could benefit from converting from a variable rate to a fixed rate by having a predictable repayment schedule particularly as interest rates are predicted to continue to rise. The primary repayment source would continue to be the City's annual allocation of federal CDBG (Community Development Block Grant) funds.