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.