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HomeMy WebLinkAboutCC Resolution 11711 (Cancel Promissory Note for Sundance Apartments)RESOLUTION NO. 11711 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN RAFAEL AUTHORIZING CANCELLATION OF THE $100,000 PROMISSORY NOTE BETWEEN MARIN HOUSING AND THE CITY OF SAN RAFAEL FOR SUNDANCE APARTMENTS AND AUTHORIZING ECONOMIC DEVELOPMENT DIRECTOR TO EXECUTE A REGULATORY AGREEMENT WITH MARIN HOUSING FOR SUNDANCE APARTMENTS (95 MEDWAY ROAD) WHEREAS, the City of San Rafael and the Marin Housing Development Corporation, a California nonprofit public benefit corporation (the "Owner") entered into a Loan Agreement (the "Loan Agreement"); dated July 14, 1989 and amended on July 2, 1990 whereby the City provided a loan in the amount of $100,000 to purchase a property located in the Central San Rafael Redevelopment Project Area at 95 Medway Road and improved with a twenty eight (28) unit residential building which the Owner rents and intends to continue renting the units at affordable housing cost to low income persons; and WHEREAS, the Loan Agreement was secured by a Promissory Note securing the loan agreement; WHEREAS, the City and the Owner desire to cancel the Promissory Note securing the loan agreement; WHEREAS, in exchange for canceling the note, the City and the Owner desire for the Owner and the San Rafael Redevelopment Agency to enter into a Regulatory Agreement (the "Agreement") on the property located at 95 Medway Road to extend the current restrictions on the Sundance apartments for an additional 39 years, to increase the number of restricted units and to lower the affordability restrictions of the restricted units; and WHEREAS, by staff report accompanying this Resolution and incorporated into this Resolution by this reference (the "Staff Report"), the City Council has been provided with additional information upon which the findings and actions set forth in this Resolution are based. NOW, THEREFORE, BE IT RESOLVED that the City Council authorizes the cancellation of the Promissory Note in the amount of $100,000; and BE IT FURTHER RESOLVED that the City Council hereby authorizes the Economic Development Director to execute on behalf of the San Rafael Redevelopment Agency the Regulatory Agreement, in a form to be approved by Agency Counsel, and to take all actions necessary to provide and implement the Agreement. BE IT FURTHER RESOLVED that this Resolution shall take immediate effect upon adoption. I, JEANNE M. LEONCINI, Clerk of the City of San Rafael, hereby certify that the foregoing Resolution was duly and regularly introduced and adopted at a reg lar meeting of the City Council of said City held on Mondav, the 7th day of March, 2005 by the following vote, to wit: AYES: COUNCILMEMBERS: Cohen, Heller, Miller, Phillips & Mayor Boro NOES: COUNCILMEMBERS: None ABSENT: COUNCILMEM 3ERS: None JEAT* M. LEONCINI, City Clerk CITYOF� Agenda Item No: 7 Meeting Date: March 7, 2005 SAN RAFAEL CITY COUNCIL AGENDA REPORT Department: Economic Development Prepared by: Nancy Mackle, Director /'A"''�� 1 Manager Approval: SUBJECT: AUTHORIZING CANCELLATION OF THE $100,000 PROMISSORY NOTE BETWEEN MARIN HOUSING DEVELOPMENT CORPORATION AND THE CITY OF SAN RAFAEL FOR SUNDANCE APARTMENTS AND AUTHORIZING ECONOMIC DEVELOPMENT DIRECTOR TO EXECUTE A REGULATORY AGREEMENT WITH MARIN HOUSING DEVELOPMENT CORPORATION FOR SUNDANCE APARTMENTS (95 MEDWAY ROAD) RECOMMENDATION: Adopt Resolution authorizing the cancellation of the $100,000 promissory note and authorize the Economic Development Director to execute a Regulatory Agreement. BACKGROUND: In 1989, Marin County Housing Development Board, an affiliate of Marin Housing, purchased a twenty eight (28) -unit apartment building located at the corner of Canal Street and Medway Road to provide affordable apartments for very low and low-income persons. The acquisition was financed through loans and grants from the City of San Rafael's affordable housing fund, the Marin Community Foundation, the Marin Housing Authority the County of Marin and a conventional mortgage. Marin Housing has been managing the apartments since the purchase. The City's loan was made pursuant to General Plan implementing program H -r, which encouraged the acquisition of housing by non-profit organizations and using the City's housing fund for that purpose. The City note was subordinate to the Marin Community Foundation loan and the payments on the City's note were to be paid from the Net Cash Flow of the project after expenses and the funding of an operating reserve. The note was due on January 31, 2005 and Marin Housing has requested forgiveness of the note in exchange for additional affordability restrictions. The loan forgiveness request is due to high costs of operating the building, resulting in limited net cash flow proceeds. To date the principal reduction payments were $9, 827. FOR CITY CLERK ONLY File No.: Council Meeting: Disposition: SAN RAFAEL CITY COUNCIL AGENDA REPORT / Pa2e: 2 In exchange for cancellation of the note, Marin Housing has agreed to enter into a regulatory agreement with the San Rafael Redevelopment Agency that would increase the level of affordability and extend the term of the restrictions. The original loan required that 25% of the units be affordable to low income households, at or below 80% of County median income, until December 31, 2005. The proposed regulatory agreement would require 50% of the units be affordable to households at or below 60% of County median income for an additional thirty-nine years. As low-income tenants currently occupy all of the units, no tenant will be required to move to meet the provisions of the regulatory agreement. FISCAL IMPACT: No impact to the City of San Rafael. $100,000 from the San Rafael Redevelopment Agency's housing fund. The Agency's investment of $3,575 per unit for Sundance is far less than the Agency's more recent grants of $25,000-35,000 per unit. OPTIONS: Adopt the resolution canceling the promissory note. Direct staff regarding other actions. Reject the request to cancel the promissory note. ACTION REQUIRED: Adopt Resolution.