Special Notice / Hearing: None__
Vote Required: Majority
To: Honorable Board of Supervisors
From: Raymond Hodges, Director, Department of Housing
Subject: Section 108 Loan Repayment
RECOMMENDATION:
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Adopt a resolution authorizing the Director of the Department of Housing, or designee to:
A) Make an advanced payment of up to $1,369,072.28 from Community Development Block Grant (CDGB) funds to the Bank of New York in early repayment of the Section 108 loan guaranteed by the U.S. Department of Housing and Urban Development (HUD), which was utilized for the construction of Trestle Glen Apartments; and
B) Provide such additional information to the Bank of New York and HUD, and to execute such additional documentation, as may be required to confirm satisfaction of the Section 108 Loan.
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BACKGROUND:
On January 29, 2008, the Board of Supervisors adopted Resolution No. 069232, which authorized the Department of Housing (DOH) to apply to HUD for a loan guarantee through the Section 108 program in the amount of $7,145,000 (the Section 108 Loan). DOH has been repaying the Section 108 Loan from the annual Community Development Block Grant (CDBG) allocation in the amount of $450,000 per year plus accrued interest.
A number of factors have contributed to the DOH's decision to make an advanced payment on the remaining balance on the Section 108 Loan. First, over the past few years developers' interest in the use of federal CDBG funding, which is subject to various HUD regulatory requirements, has been dampened by the availability of Measure K funding through the County's Affordable Housing Fund. Second, a number of projects funded in part by DOH with CDBG funding have cancelled the commitment and released the CDBG funds back to DOH. Third, DOH receives loan repayments from existing, CDBG-funded projects, logged as program income, which DOH is required to reuse as CDBG funding. Altogether, these factors have impaired DOH's ability to comp...
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