SUBJECT: APPROVAL OF A FUND RESERVATION TO ROBERTS AVENUE, LLC, OR ITS DESIGNATED PARTNERSHIP, FOR THE ACQUISITION, PREDEVELOPMENT, CONSTRUCTION AND PERMANENT FINANCING OF THE PROPOSED ROBERTS AVENUE SENIOR APARTMENTS AND ASSIGNMENT OF AN OPTION AGREEMENT FOR THE PURCHASE OF PROPERTY
COUNCIL DISTRICT: 7
It is recommended that the City Council adopt a resolution:
1. Approving fund reservations for a loan of up to $6,100,000 and a grant of up to $1,500,000 to Roberts Avenue, LLC, for the 100-unit Roberts Avenue Senior Housing Development, affordable to very low-income seniors, located at the Northeast corner of Roberts Avenue and Vintage Way.
2. Approving an Option Agreement for the Purchase of Property by Roberts Avenue, LLC, or its designated affiliate from the City of San José.
3. Approving an increase in the Predevelopment Loan for a total amount of $625,000.
On June 27, 2000, the City Council approved a resolution approving the selection of Bridge Housing Corporation and Community Home Builders and Associates as the developers of the Roberts Avenue seniors and teachers housing projects respectively and predevelopment loans in the amount of $500,000 to each entity.
This staff report is for the senior housing component of the site, which will be located on 1.78 acres of land at the northeast corner of Roberts Avenue and Vintage Way, to allow the development of 100 units of affordable senior housing. In advance of this action, Bridge Housing Corporation, of which Roberts Avenue, LLC is an affiliate, has submitted a request for a reservation of City housing funds commitment to finance the project in order to submit an application for either the California Housing Finance Agency (CHFA) or the California Debt Limit Allocation Committee (CDLAC) by June 1, 2001.
The project consists of 100 units of senior housing and parking to be constructed on a 1.78 parcel located at the northeast corner of Roberts Avenue and Vintage Way.
The total project cost is estimated at $18,265,372. The construction financing package includes first mortgage financing of approximately $5,615,834, equity investor payment of approximately $4,324,304, a Federal Home Loan Bank/Affordable Housing Program (AHP) loan of approximately $300,000, the proposed City loan of up to $6,100,000, plus a City Grant of up to $1,500,000 to fund extremely low-income (ELI) units.
There are two options for the first-mortgage financing that are being considered by the sponsor: a California Housing Finance Agency (CHFA) loan; or, a California Debt Limit Allocation Committee (CDLAC) allocation for the City to issue tax-exempt bonds. Although the preferred option is the CHFA loan, the sponsor has been doing all the steps to prepare for a CDLAC application as a fall-back position. By the time this report is considered by the City Council on May 29, 2001, it will be known whether the first mortgage financing will come from a CHFA loan or tax-exempt bonds issued by the City.
Under either first-mortgage financing scenario, it is anticipated that construction will begin in November 2001. The project would be ready for occupancy in late-2002.
The purchase price for the senior component of the land has been set at $2,277,222. This value is supported by an appraisal performed for the City of San José by Cushman & Wakefield as of April 9, 1999. The City of San José owns the subject property and intends to sell it to the sponsor for the development of the Roberts Avenue Senior Housing development. The option Agreement will permit City to transfer the property to Roberts Avenue, LLC, under certain conditions. The transfer will be accomplished through a Disposition and Development Agreement (DDA), which staff will present to Council for approval in August 2001.
The sponsor is requesting a $125,000 increase in its Predevelopment Loan from the City, for a total loan of $625,000. No other changes to the terms and conditions of the loan are proposed.
In accordance with the Replacement Housing Plan, Downtown Development Projects, adopted by the Redevelopment Agency Board in January 2000 and the Replacement Housing Plan, Hellyer-Piercy Improvement District, adopted by the Redevelopment Agency Board in February 2001 (“Plans”), the 15 units affordable to extremely low-income households and the 84 units affordable to very low-income households to be constructed as part of this development are to be designated as available to satisfy the Agency’s Replacement Housing obligation as described in the Plans.
The attached fact sheets provide detailed information on the proposed project and fund reservation.
A tax regulatory agreement with 55-year affordability requirements will be recorded on the property with the issuance of bonds. The closing of the City’s acquisition loan will include the recordation of 55-year affordability restrictions against the housing property.
The preparation of this report has been coordinated with the Office of the City Attorney.
Funds for the proposed permanent loan commitment are available in the Housing Department’s Fiscal Year 2000-01 budget.
Acting Director of Housing
Roberts Avenue Senior Apartments
Developer: Roberts Avenue, LLC (Bridge Housing Corporation)
Architect: James Guthrie & Associates
Contractor: L & D Construction
Property Manager: Bridge Housing Management Corporation
Project Location: Roberts Avenue and Vintage Drive
Council District: 7
Project Type: Senior rental
Group Served: Very low-income households
Number of Units: 100 (15 ELI, 84 very low-income and one unrestricted manager unit)
Bedroom Mix and
Monthly Rent: 1 BR 2 BR
ELI (30% AMI) 15 @ $455
VLI (45% AMI) 55 @ $700 9 @ $830
VLI (50% AMI) 20 @ $782
Unrestricted 1 Mgr Unit
Other Amenities: Community space with full kitchen, lobby and seating area, library area, nurse/counseling area, on-site management office, private courtyard, elevators.
Estimated Total Project Cost: $18,265,372
Estimated Cost Per Unit: $182,654
Anticipated City Subsidy/Unit at
Permanent Loan: Up to $6,100,000 or $72,619/unit permanent loan - for the 84 VLI units
Permanent Grant: Up to $1,500,000 or $100,000/unit grant – for 15 ELI units
Assumed Leverage per VLI Unit: 2.52 to 1
Assumed Leverage per ELI Unit: 1.83 to 1
GP Designation: 8 - 16 dwelling units per acre
PD Rezoning Status: Approved
PD Permit Status Pending
Building Permits: Pending
Article XXXIV Status: Authority from Measure D (1994) is available
Relocation Needed: None required for this project
1. City to review all development budgets prior to returning to the City Council for approval of business terms for the acquisition, construction and permanent loans.
2. Borrower shall submit an application to the California Housing Finance Agency (CHFA) by May 30, 2001 or shall submit a CDLAC application package to the City for the June 1, 2001 filing deadline.
3. At a minimum, the project must continue to meet its proforma income and expense cash flow projections and timeline, as presented in the final project proforma approved by Housing Department staff.
4. The project will be allowed the following to be identified as permitted expenses for purposes of calculating net cash flow:
a) A Partnership/Asset Management Fee equal to $20,000 per year, fixed for 15 years.
5. City approval of the DDA.
Estimated Project Development Timeline
May 15, 2001 Anticipated City Council Approval of Bond Issuance and Bond Documents
May 29, 2001 Anticipated City Council Approval of Fund Reservation
May 30, 2001 CHFA Loan Application Deadline
June 1, 2001 CDLAC Application Deadline
August 2001 Anticipated City Council Approval of Acquisition, Predevelopment, Construction and Permanent Loan Business Terms
August 2001 Anticipated Council approval of the DDA and transfer of
property from City to Sponsor.
October 2001 Anticipated Issuance of Building Permits
November 2001 Anticipated Start of Construction
December 2002 Anticipated Completion of Construction