Title
Resolution to Allocate $205,000.00 in HOME Funds to Whispering Creek Project LLC for the Acquisition and Rehabilitation of 3335 - 3337 Platt Road and to Approve the Housing Affordability Agreement ($205,000.00 HOME Funds)
MEMORANDUM
Attached for your review and approval is a resolution to allocate $205,000 in HOME Funds to Whispering Creek Project LLC, a subsidiary of Michigan Ability Partners (MAP), to acquire and rehabilitate 6 units of transitional housing for disabled persons, with a set-aside for disabled veterans. MAP and HERO will provide on-site and off-site treatment and employment services.
The total budget is $398,209.00. The request for City funds constitutes 52% of the total project costs. Michigan Ability Partners has secured $100,751.00 from the Department of Veteran's Affairs, $12,500.00 from Washtenaw County and $79,958.00 from the Federal Home Loan Bank.
The project is consistent with the City's Consolidated Strategy and Plan. The targeted tenants are extremely low income and are considered a special needs population. The City Attorney's office will review the legal and contractual documents to ensure that Whispering Creek Project LLC will comply with the requirements in the HOME regulations. It will be the responsibility of the Office of Community Development to monitor agency compliance with these regulations as part of their annual HOME Program monitoring.
Consistent with HOME Program requirements, a mortgage and housing affordability agreement will be placed on the property to preserve the affordability of these units. The project will be ineligible for additional HOME funds for a minimum of 15 years as required by the HOME program regulations. The City's affordability period will be 99-years, consistent with previous projects. Consequently, Whispering Creek Project LLC will ensure that replacement reserves (for large property improvements such as a new roof) and operating reserves are included in the budget and placed in a restricted escrow account.
Based on an underwriting analysis by the Office of Community Development, it was determined that the project could not support debt service on the City funds. Consequently, Whispering Creek Project LLC is requesting a 0% interest, deferred loan.
The Housing Policy Board (HPB), at its meeting on December 15, 2006, reviewed the MAP request and recommended approval of a 99-year, 0% interest, deferred loan, contingent on Whispering Creek Project LLC securing permanent financing, which was secured in December 2007. The HPB did not approve a funding amount, which was to be determined after the Office of Community Development performed the necessary financial underwriting and due diligence.
Effective January 1, 2008, the HOME budget reflects $634,000.00 in uncommitted and available funds.
The Office of Community Development recommends City Council approve the $205,000.00 HOME loan as a 0% interest, 99-year term, deferred payment loan, with repayment upon sale or transfer of the property. The loan will be forgiven after 99 years. The Office of Community Development also recommends that the City include a right of first purchase and an equity-sharing clause allowing Whispering Creek Project LLC to retain 48% of the equity after paying off all liens, and allowing the City to retain 52% of the equity.
Whispering Creek Project LLC will receive Human Rights and Living Wage approval prior to executing any contracts, MAP received Human Rights and Living Wage approval July 1, 2007.
Staff
Prepared by: Jennifer Hall, Housing Program Coordinator
Reviewed by: Mary Jo Callan, Community Development Director
Jayne Miller, Community Services Administrator
Body
Whereas, An application was received in November 2006 from Whispering Creek Project LLC, an affiliated entity of Michigan Ability Partners (MAP), for financial assistance to acquire and rehabilitate 6 units of transitional housing for extremely low-income disabled individuals, with a set-aside for disabled veterans;
Whereas, Of the total estimated project cost of $398,209.00 Whispering Creek Project LLC has leveraged $100,751.00 from the Department of Veteran's Affairs, $12,500.00 from Washtenaw County and $79,958.00 from the Federal Home Loan Bank; and
Whereas, This project will provide housing and supportive services to disabled individuals, which is a high need in the City's Consolidated Strategy and Plan;
RESOLVED, That City Council approve the allocation of $205,000.00 of HOME Funds to Whispering Creek Project LLC for the acquisition and rehabilitation of 6 units of affordable housing at 3335 - 3337 Platt Road as a 0% interest, deferred payment, 99-year loan to be repaid if the property is transferred or the use changes from low-income residential within the term of the loan and further, to be converted to a grant at the term end;
RESOLVED, That City Council approve a right of first purchase clause by the City and an equity-sharing clause allowing Whispering Creek Project LLC to retain 48% of the equity after paying off all liens, and allowing the City to retain 52% of the equity as a condition of the loan;
RESOLVED, That as a condition of loan disbursement, Whispering Creek Project LLC will execute a mortgage and promissory note consistent with this Resolution, subject to approval as to substance by the City Administrator and approval as to form by the City Attorney;
RESOLVED, That the Mayor and City Clerk be hereby authorized and directed to sign a Housing Affordability Agreement consistent with this resolution, subject to approval as to substance by the City Administrator and approval as to form by the City Attorney with funds to be available until expended without regard to fiscal year; and
RESOLVED, That the City Administrator, or his designee, be authorized to take necessary administrative actions and to execute any documents necessary to complete this transaction and to implement this resolution.