HomeMy WebLinkAboutRES NO 042-19RESOLUTION NO. 0 42 - 1 9
RESOLUTION TO LEND UP TO $1.2 MILLION DOLLARS IN
HOME INVESTMENT PARTNERSHIPS (HOME) FUNDS TO
DANCO GROUP OF COMPANIES FOR THE
CONSTRUCTION OF 58 AFFORADBLE HOUSING UNITS,
ON APN 132-010-31 IN BAKERSFIELD, CA.
WHEREAS, the Congress of the United States has enacted the "HOME
Investment Partnerships" Act ("the Program" herein) at 42 USC 12741 et. seq. of
the Cranston -Gonzalez National Affordable Housing Act and amendments ("the
Act" herein); and
WHEREAS, CITY has received funds pursuant to the Program from the
Department of Housing and Urban Development ("HUD" herein); and
WHEREAS, CITY desires to maintain affordable housing in the city limits of
Bakersfield ("the Targeted Area"); and
WHEREAS, The DANCO Group of Companies (DANCO) is in the business of
developing, managing, and maintaining affordable housing complexes; and
WHEREAS, DANCO intends to purchase and construct 58 affordable
housing units, including one manager's unit, located at APN 132-010-31
("Project Property" herein); and
WHEREAS, it is CITY's intent to assist DANCO in developing affordable
housing by lending to DANCO up to ONE MILLION TWO HUNDRED THOUSAND
DOLLARS ($1,200,000.00) to construct the Project Properties; and
WHEREAS, DANCO desires a funding commitment from CITY to apply for
nine percent (9%) Low Income Housing Tax Credits to complement costs to
purchase and develop all of the affordable units that make up the Project
Property.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
Bakersfield as follows:
The above recitals are true and correct and incorporated herein.
2. The City Council finds and declares that it is necessary and in the
best interests of the City to provide the following assistance to DANCO in the
development of the Project Property: Up to One Million Two Hundred Thousand
Dollars ($1,200,000.00) of HOME funds being provided in the form of a one
percent (1%) per annum simple interest residual receipts loan, over a 55 -year
term. No interest shall accrue during the construction of the project; and
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3. This funding commitment is made with the following conditions:
3.1. DANCO shall successfully obtain the 9% federal tax credits
yielding an estimated $10,724,583 in gross proceeds from the sale of tax credits
for their 9% application.
3.2. This commitment is based on the project pro -forma dated
January 111h, 2019, including a minimum project size of 58 units with 23 units
affordable to households at 30%, 16 units at 40%, 18 units at 50% of area median
income (AMI), and one manager's unit.
3.3. Key components of the project pro -forma (affordability,
developer fee, sources and uses, etc.) shall not change without CITY's
administrative approval.
3.4. All HOME assisted units shall remain affordable for a minimum
of 20 years.
3.5. DANCO shall sign and record an affordability covenant on
the Project Property that secures the affordability and monitoring rights of the
City of Bakersfield for the duration of the affordability period.
3.6. Construction of the project shall not commence until DANCO
can demonstrate that all funding is committed for the project's construction
and permanent financing; however, construction shall commence within one
year of a funding commitment of HOME funds as defined in 24 CFR 92.504.
3.7. DANCO and staff shall provide regular updates, no less than
annually, to the CITY regarding DANCO's ability to secure financing, particularly
as it relates to federal tax credits. The first check-in shall occur in fall 2019, and
shall continue annually during the predevelopment period of this project.
3.8. If all financial commitments necessary for the project to be
developed are not secured and building permits are not pulled for the
Brentwood Crossings project by March 31 �t, 2020, this funding commitment shall
expire unless extended by the City Manager.
3.9. If applicable to funding, DANCO shall take the necessary
steps and shall provide adequate documentation annually during project
phases (planning, construction, and permanent financing) to ensure that one
or more organizations within the project's partnership qualifies and maintains
status as a Community Housing Development Organization (CHDO).
3.10. CITY expects DANCO to take all necessary steps, including
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the reduction of the project developer fee, to avoid returning to CITY for
additional subsidies if project costs exceed budget.
3.11. A final subsidy underwriting and layering review is completed
by the City of Bakersfield to confirm the projects viability and full compliance
with HOME regulations pursuant to 24 CFR 92.250. This underwriting review will
occur prior to issuing a funding "commitment" as defined in 24 CFR 92.2. Failure
to fix any compliance issues identified with the HOME Investment Partnership
Funds (HOME) program or the City of Bakersfield's underwriting and subsidy
layering review during this review will result in the denial of HOME funding for this
undertaking.
3.12. The City of Bakersfield, pursuant to its Citizen Participation
Plan requirements as defined in its 2020 Consolidated Plan and in accordance
with 24 CFR 91.105, successfully completes a Substantial Action Plan
Amendment, including adoption by the Bakersfield City Council, to allocate
HOME funds towards the project.
3.13. The City Council gives authority to the City Manager or his
designee to carry out the direction of this resolution upon the conditions and
terms provided herein.
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1 HEREBY CERTIFY that the foregoing Resolution was passed and adopted by the
Council of the City of Bakersfield at a regular meeting thereof held on APR 1 0 2019
by the following vote:
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COUNCILMEMBER: RIVERA, GONZALES,WBIR: SMITH, SULLIVAN, PARLIER, FREEMAN
NOES: COUNCILMEMBER: NO
A39AINCOUNCILMEMBER:
SE COUNCILMEMBER:
JUDE—MAKI
CITY CLERK and Ex Officio Clerk of the Council of
the City of Bakersfield
APPROVED APR 10 2019
by:iAA
KAREN GOH
u' •R
APPROVED AS TO FORM:
VIRGINIA GENNARO
CITY ATTORNEY
By: 7� C'`---
OSHUA H. RUDNICK
Deputy City Attorney
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