Special Notice / Hearing: None__
Vote Required: Majority
To: Honorable Board of Supervisors
From: Raymond Hodges, Director, Department of Housing
Subject: Visitacion Gardens Project - Loan Modification
RECOMMENDATION:
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Adopt a resolution:
A) Authorizing and directing the Director of the Department of Housing, or designee, to negotiate and execute, in consultation with the County Attorney, such documents necessary to assign the County’s HOME Investment Partnerships Program loan agreement and related documents with BRIDGE Housing Corporation and/or Bridge Senior Housing, Inc. in the amount of $175,000, dated in August 1998, to Housing Endowment and Regional Trust of Silicon Valley (HEART-SV) in connection with HEART-SV’s anticipated lease and operation of the Visitacion Gardens Senior Housing Project; and
B) Authorizing and directing the Director of the Department of Housing, or designee, to negotiate and execute, in consultation with the County Attorney, an amended and restated County HOME Investment Partnerships loan agreement and associated documents with HEART-SV to restate the outstanding loan balance to $227,436, including forgiveness of accrued interest, extend the term to 55 years, and amend and reinstate affordability restrictions ensuring continued affordability for five (5) restricted units at the Project, and make such other amendments; and
C) Approving and authorizing the forgiveness of a portion of the accrued interest on the County’s HOME Investment Partnerships Program loan in an amount necessary to restate the outstanding loan balance at $227,436 as of the closing of the restated loan and lease transaction; and
D) Authorizing the Director of the Department of Housing, or designee, to terminate the Memorandum of Understanding with the City of Brisbane, and BRIDGE Housing Corporation or assignee, dated March 1, 2001 and to negotiate and execute, in consultation with the County Attorney, an amended and restated Memorandum of Understanding (MOU) with the City, HEART-SV and/or such other necessary parties, as deemed necessary and advisable to govern the allocation of residual receipts for repayment of the County’s HOME Investment Partnerships Program loan; and
E) Authorizing and directing the Director of the Department of Housing, or designee, to negotiate and execute, in consultation with the County Attorney, all documents, agreements, certificates, extensions, and instruments necessary to complete the closing of the transaction and implement the amended and restated County HOME Investment Partnerships Program loan documents consistent with the purposes of this resolution.
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BACKGROUND:
A. The Visitacion Gardens Apartments Project
In the late 1990s, a 14 unit multifamily, income-restricted senior rental housing project located at 2 Visitacion Avenue in Brisbane, now known as the Visitacion Gardens Apartments (the “Project”), was developed. The Project remains in operation and serves low- and moderate-income seniors.
On January 26, 1998, in connection with the Project’s initial development, the Redevelopment Agency of the City of Brisbane and BRIDGE Housing Corporation (“BRIDGE”), entered into a 30-year ground lease requiring the development of the Project. The lease term expires on January 26, 2028.
B. The County HOME Loan
On August 18, 1998, pursuant to this Board’s authorization under Resolution No. 62226, the County entered into a loan agreement with BRIDGE to provide $175,000 in federal HOME funds for the development of the Project (the “County Home Loan”). In connection with the County HOME Loan, BRIDGE executed a promissory note, secured by a deed of trust, evidencing its repayment obligations. Interest on the note accrued simple interest at a rate of 3% per annum. Under the terms of the County Home Loan agreement, five (5) units at the Project were required to meet HOME affordability restrictions for a period of 20 years. These affordability restrictions expired in 2018.
On June 30, 1999, BRIDGE Housing Corporation assigned its leasehold and related agreements for the Project to Brisbane Senior Housing, Inc.
On March 1, 2001, the County, the Brisbane Redevelopment Agency (“Agency”), and Brisbane Senior Housing, Inc. executed a Memorandum of Understanding (MOU) establishing a framework governing repayment of various loans on the Project. Presuming a total indebtedness of $2,952,086, surplus cash distributions were proportionately allocated as follows: 5.93% to the County ($175,000 / $2,952,086); 79.13% to the Agency ($2,336,086 / $2,952,086); and 14.94% to the Agency for lease payments ($441,000 / $2,952,086).
The County HOME Loan funds have been fully disbursed and expended. The outstanding principal balance plus interest is estimated as of May 30, 2026, to be $301,015.66. The County Home Loan accrues interest at a daily rate of $14.38, and the final payoff amount will be calculated based on the actual payoff date. To date, the County has not received funds toward repayment of the County Home Loan.
C. Anticipated New Lease To Heart-SV And Rehabilitation Of The Project
On August 26, 2025, the City of Brisbane (“City”) and the Brisbane Housing Authority issued a Request for Proposals seeking a new operator and/or manager for the Project, with the option to enter a new ground lease. The Housing Endowment and Regional Trust of Silicon Valley (“HEART-SV”), a special purpose entity formed by the Housing Endowment and Regional Trust, was selected as the new operator in anticipation of entering a new 55-year ground lease with the City.
HEART-SV’s financing plan includes: (a) seeking a Brisbane Housing Authority loan of up to $3,452,814 and additional Brisbane Housing Authority funding of up to $390,250; (b) the restated County HOME Loan of up to $227,436, reflecting forgiveness of a portion of accrued interest; and (c) a HEART loan of up to $450,000.
HEART-SV has committed to honor all existing leases and current AMI designated rent levels for tenants and will preserve affordability through regulatory agreements and deed restrictions consistent with an approved affordability plan.
HEART-SV will also invest approximately $520,876 in rehabilitation to address immediate health, safety, and deferred maintenance needs identified in its Capital Needs Assessment, ensuring safe and high-quality housing for low-income senior residents.
DISCUSSION:
Visitacion Garden Apartments is a 14-unit senior affordable housing development in Brisbane originally developed by BRIDGE under a ground lease with the Brisbane Housing Authority. With the current ground lease set to expire in 2028, BRIDGE will exit its role as operator. Through the City’s competitive process, HEART-SV has been selected to assume long term responsibility for the Project.
HEART-SV has approved a new 55-year ground lease under which it would acquire and operate the Project improvements. (HEART-SV Resolution 2026 02). In connection with its acquisition of the leasehold and rehabilitation, HEART-SV has requested that the County restructure its existing loan to forgive a portion of accrued interest and restate the loan balance to $227,436. The restated County HOME Loan would be repayable through residual receipts, evidenced by a restated promissory note with a 55-year term, subject to 3% simple interest. The restated note would be secured by a restated deed of trust that would be subordinate to the City’s and the Brisbane Housing Authority’s deeds of trust; however, the County’s restated regulatory agreement requiring affordability restrictions for 55 years would not be subordinated.
The proposed restructuring of the County HOME Loan will reinstate affordability restrictions that expired under the County’s original loan documents. Under new regulatory agreement, HEART-SV will restrict five units, four units at 60% AMI and one unit at 50% AMI and will facilitate the preservation of all 14 senior units for at least 55 years.
Staff recommends that the Board approve and authorize restructuring the County HOME Loan. The restructuring enables the transition of ownership from BRIDGE to HEART-SV, supports long-term affordability, aligns with the City’s new 55-year ground lease, reinstates lapsed affordability protections, and advances the preservation of needed senior affordable housing in Brisbane.
The County Attorney has reviewed the proposed resolution as to form.
COMMUNITY IMPACT:
Visitacion Garden Apartments provides 14 affordable senior housing units in Brisbane. The proposed loan restructuring and HEART-SV’s new lease will restore expired affordability protections and ensure long term preservation of 5 units for households at 50%-60% AMI, while the transaction as a whole will preserve affordability of the remaining units. Rehabilitation work will address immediate health, safety, and deferred maintenance needs, helping to extend the useful life of the property. These improvements will directly benefit current residents and ensure that future low-income seniors have access to safe, stable, and high-quality housing in the Brisbane community.
FISCAL IMPACT:
There is no Net County Cost associated with the restructuring of the County HOME Loan. The forgiven accrued interest on the County HOME Loan would otherwise have been applied for eligible HOME projects. The restructured County HOME Loan amount funded by the HOME program will be repaid through annual residual receipts as reported in the Project’s annual financial statements.