Housing Department

CITY COUNCIL

Washington Park Classics ProjectThird Amendment Agreement to OPLA

Jim Wong, Senior Project ManagerOctober 15, 2012

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Housing Department

Washington Park Classics Amendment

Background:

•8-unit for-sale housing project was contracted w/ Trademark Development in Aug. 2005 and completed in May 2012•Under existing OPLA, City’s $1.53M project loan would be repaid from recast loans to homebuyers ($524,245) and the balance would be forgiven ($1,005,624)•In late-July 2012, developer requested additional forgiveness on City loan based on project financial shortfall

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Housing Department

Washington Park Classics Amendment

Background:

•Additional City loan forgiveness of $368,645 necessary to avoid default and close project cost-revenue gap with $0 profit to developer•To meet construction lender’s release requirements and expedite closing of affordable unit #107, City will provide a $74,000 HOP loan to homebuyer•City will recover the $74,000 by placing a demand on sales proceeds of 4 units in escrow ($18,500 per unit)

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Housing Department

Washington Park Classics Amendment

Existing OPLA Terms

•$1,005,624 of City Loan to be forgiven

•$524,245 of City Loan recast to homebuyers

•Affordable units: 4 Moderate income

Amended OPLA Terms

•$1,374,269 of City Loan to be forgiven

•$155,600 of City Loan recast to homebuyers

•Affordable units: 3 Low income 3 Moderate income

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Housing Department

Washington Park Classics Amendment

Staff considered the following:

•Project’s role in removing neighborhood blight

•Additional state funding secured to increase number of affordable units and reach low income

•Developer’s 7-year commitment to the project in the face of major challenges (storm drain, change in construction lender, declining real estate market, tight mortgage lending conditions)

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Housing Department

Washington Park Classics Amendment

Approval of staff recommendation will:

•Prevent project from potential default on construction loan•Preserve City’s affordable housing covenants•Assist successful close-out of project, bringing a positive impact to neighborhood

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Housing Department

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Washington Park Classics Amendment

Project Sales Status

•Sold: 2 market rate units•Affordable unit #107 to close week of Oct. 15•Other 5 affordable units in escrow to close between Oct. 22 to Nov. 15