1. James Wong, Senior Project Manager April 23, 2018
CITY COUNCIL Loan Agreement for Rehabilitation of Villa Los Robles 473 N. Los Robles Avenue
James Wong, Senior Project Manager
April 23, 2018

2. Villa Los Robles 473 N. Los Robles Ave

3. Recommendation
Finding of categorical exemption for rehab projects under CEQA
Approve budget appropriation of $1,050,000 in Housing Successor and HOME funds to rehab Villa Los Robles project
Approve key business terms of Rehab Loan Agreement w/ owner Villa Los Robles Partners LP

4. Background
Villa Los Robles, 8-unit affordable rental project at 473 N. Los Robles Ave
Developed in 1992 w/ tax credits, two State housing loans, and City redevelopment housing loan
Restricted to low & very low income families w/ initial income < 60% AMI, two units restricted at 35% AMI
7 three-BR & 1 two-BR units, total 26 persons housed
26-year old wood-framed building w/ capital needs including dry rot, termite & rust damage, and worn/life-exhausted components

5. Background
Sewer lateral break in 2004 caused ongoing financial drag on the project: a) hard debt payments on the State CalHFA loan that was modified to finance repairs, b) near depletion of replacement reserves.
Small project:
> Lack of economies of scale constrains cash flow,
financially challenging to sustain.
> Comparative disadvantage refinancing/tax credit
re-syndication to raise funds for project rehab.
Project cash flow expected to improve after 2032 when state CalHFA loan is paid off, freeing up $11k annually for property maintenance and reserves

6. Key Terms of Rehab Loan Agreement
City deed of trust loan NTE $1,050,000 ($651k Housing Successor and $399k HOME – these funds are required to be expended per State/Federal law)
No-interest annual payments from available net cash flow (“residual receipts”), 55-year loan term
Rehab scope: 1) Address capital needs & extend building useful life, 2) upgrade worn or life-exhausted components, 3) install energy efficiency improvements, 4) augment replacement reserve.
Comply with all applicable City policies, including local hiring and minimum wage
New 55-year City covenant to year 2073 (adds 26 yrs)

7. Benefits of Villa Los Robles
Serves larger families
Stable affordable housing has helped families attain educational goals - At least one family member has graduated from college, and another is enrolled
Small project has integrated well into the neighborhood
Important to preserve small infill affordable rental projects as they have become difficult to develop and finance.

8. Villa Los Robles 473 N. Los Robles Ave