SR 05:219 - Laserfiche WebLink

While the developer has the opportunity to pay down the principal of the loan, payment of principal is not anticipated. Any payment of principal would reduce the annual interest payments. Any unpaid interest and/or principal amount due at the end of the lease term will be forgiven. The City Loan Documents also include a Deed of Trust and Assignment of Rents which in part include the assigning rents from the project to pay the City Loan. HELP Loan This past May, the City Council approved a resolution authorizing submittal of a HELP loan application to the California Finance Agency in the amount of $2 million for the project. The City was recently informed that a loan for $l.S million was approved. The reduced approval amount results from a CalHF A requirement limiting a total loan amount to anyone agency of $2 million. The City recently received a loan of $SOO,OOO that is being used to provide low-income mortgages. The new HELP loan will be used for project construction. The term of the attached CalHFA Loan Agreement is 3% simple interest per annum with payments deferred for the term of the loan, which is ten years. While staff anticipates the project making regular payments on this loan, assuming no payments are made during the entire term, the amount owed would be $1,9S0,000. To accommodate the HELP loan, the City will be executing a HELP Loan Agreement and Promissory Note and the other documents included in the recommendation, with BLP requiring repayment of the loan from project operating revenue. These documents are similar to the City Loan documents attached to this report and are available on the DVD. The loan will be viewed as an operating expense. However, because the loan is not due for ten years, staff anticipates that BRIDGE and the City will use discretion regarding the amount paid to assure there is an adequate balance between project operational needs and loan payments subject to the COP documents. However, staff anticipates making annual loan payments to amortize the debt over the ten-year loan period. The payment of this loan could impact the project's ability to make payments on the City Loan since it is paid prior to calculating the amount of available surplus cash. In the event the project is unable to repay the total HELP loan commitment prior to the end of the loan term, the City and BRIDGE would need to develop a repayment plan that could include the City advancing money from its Lower Income Housing Fund. If this occurs, staff anticipates an additional loan with the project to repay the City. Attachment D includes a resolution approving the HELP loan as required by the California Financing Agency. SR:05:219 Page 10