CITY COUNCIL REGULAR MEETING AGENDA PACKET

MEMORANDUM Date: To: From: Subject: May 23, 2024 Mayor and City Council Steve Hernandez, Housing Manager Ellen Clark, Director of Community Development Continued from May 21, 2024, Item 6 City Council Meeting: Adopt a resolution approving the Ridge View Commons Senior Rental Housing Complex Amended and Restated Loan Agreement, Ground Lease, and Regulatory Agreement, and authorize the City Manager to execute all documents, including subordination agreements, and take all steps necessary for the refinancing and renovation of Ridge View Commons This memorandum summarizes revisions to various of the documents included as attachments to the May 21, 2024 City Council Agenda Item, based on changes requested by some of the parties to the refinancing of the Ridge View Commons project. Staff was informed of the changes shortly before the City Council meeting, and continued the item so the revisions could be properly reflected in the documents as necessary. The key revision is with respect to the term of the ground lease with the City, which the investor has requested reflect an 85-year, versus 75-year, term. The investor is requiring a minimum 85-year term in order to demonstrate the debt can be refinanced at the end of the loan term. 85 years provides 30 years beyond the 55-year maturity date of the City loan. According to the investor, this change avoids potential risks of the IRS recharacterizing the financing a grant, versus a loan, which would jeopardize the investor’s ability to use low-income housing tax credits. The City’s legal counsel has advised the change in the term of the ground lease is a material change that required pulling this item from the May 21 consent calendar. The revised draft ground lease (Attachment 2), now reflects the extended 85-year term. Staff is supportive of this change, since it will facilitate the financing of the renovation. Staff notes that the timing for approval and execution of the various loan documents is critical. The project was able to secure from the California Debt Limit Allocation Committee (CDLAC) a 5-day hardship extension to the original issuance deadline of June 3, 2024. Consequently, the project now has a new issuance deadline of June 10, 1 of 2 Item #7 Page 71 of 428