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C. 77

To:	Board of Supervisors
From:	John Kopchik, Director, Conservation & Development Department
Date:	November 14, 2017

Contra

Costa

County

Subject:

Approval of Transfer of Ownership of Woods Grove Apartments in Pittsburg

APPROVE	OTHER
RECOMMENDATION OF CNTY ADMINISTRATOR	RECOMMENDATION OF BOARD COMMITTEE

Action of Board On: 11/14/2017

APPROVED AS RECOMMENDED

OTHER

Clerks Notes:

VOTE OF SUPERVISORS

AYE:

John Gioia, District I Supervisor
Candace Andersen, District II Supervisor
Karen Mitchoff, District IV Supervisor

ABSENT:

Diane Burgis, District III Supervisor
Federal D. Glover, District V Supervisor

Contact:

Kara Douglas 925-674-7880

I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown.
ATTESTED: November 14, 2017
David Twa,

BY:	, Deputy

RECOMMENDATION(S):

1. CONSENT to the transfer of ownership of Woods Grove Apartments in Pittsburg from BRIDGE Regional Partners, Inc. to Reliant - Woods Grove, LP;



2. APPROVE the associated legal documents including a First Amendment to County HOME Loan Agreement, Assignment and Assumption Agreement, Subordination Agreements and Termination of Affordability Covenant;

RECOMMENDATION(S): (CONT'D)

3. FORGIVE the accrued interest on the HOME loan; and

4. AUTHORIZE the Conservation and Development Department Director to execute and deliver the documents listed above.

FISCAL IMPACT:

No impact to the General Fund. There is an existing HOME Investment Partnerships Act loan on Woods Grove Apartments that will be assigned to Reliant - Woods Grove LP. BRIDGE is requesting forgiveness of approximately $160,000 in accrued interest on the HOME loan.

BACKGROUND:

Woods Grove is an existing 80-unit apartment complex at 850 East Leland Road in Pittsburg. In 2010, the County loaned BRIDGE Regional Partners Inc. (BRIDGE) $800,000 of HOME Investment Partnerships Act (HOME) funds for the rehabilitation of the apartments. In exchange for the loan, BRIDGE designated 11 units as "HOME-assisted." These units are required to be affordable to and occupied by families with incomes at or less than 30 percent of the area median income for 55 years. BRIDGE used the HOME funds for energy efficiency improvements to reduce utility costs. BRIDGE had hoped to finance additional rehabilitation with low-income housing tax credits (LIHTC). However, the LIHTC qualifications changes, BRIDGE was not able to use this financing and the repairs were not done.

BRIDGE has entered into a purchase and sale agreement with Reliant - Woods Grove LP (Reliant). Both parties request the County approve the transfer of ownership and allow the existing County documents to be assigned to, and assumed by Reliant. The HOME Regulatory Agreement will remain and will be assigned to and assumed by Reliant. In addition, Reliant is requesting some modifications to the loan agreement to reflect the current financing and ownership. The modifications also clarify that references to the rehabilitation of the property mean the work to be undertaken by Reliant, update certain definitions, and eliminate requirements that have already been met by BRIDGE. Reliant intends to rehabilitate the property by replacing the roofs and windows, painting the exterior, upgrading and installing energy efficient site lighting, converting eight units to be compliant with Americans with Disability Act standards, and upgrading kitchen and bathrooms as necessary. The work is expecting to begin in late winter/early spring 2018 and conclude by December 2018.

In October 2010, BRIDGE recorded an Affordability Covenant to confirm that 100 percent of the units (with the exception of the manager's unit) at Woods Grove Apartments were affordable to low income households. In order to complete the sale to Reliant, BRIDGE must terminate its Affordability Covenant. The title company is requiring the County's consent to the termination of that agreement.

Finally, BRIDGE is seeking forgiveness of approximately $160,000 of accrued interest on the HOME loan. BRIDGE made significant investments of its own funds to Woods Grove through a combination of loans and corporate advances. BRIDGE will not be fully repaid its own funds through the sale of the property. Reliant is willing to assume only the principal of the HOME loan, and not the accrued interest. The HOME program regulations allow HOME funds to be provided to affordable housing developers as either grants or loan, and do not require interest payments. The County typically provides HOME funds in the form of a loan so that the County has a recorded lien on the property. This gives the County the opportunity to participate in discussions with other lenders if the borrower is in default under any of its agreements. Should the property have surplus cash-flow, the borrower makes loan payments to the County and the funds are used for additional affordable housing development. Often when properties are sold and rehabilitation work is done, the new owner seeks additional County funds to assist with the rehabilitation work. In this case, the seller is requesting that the County forgive the accrued interest to reduce the purchase price and facilitate the sale to the buyer.

Department of Conservation and Development requests that the Board of Supervisors approve the attached documents in their substantially final form.

CONSEQUENCE OF NEGATIVE ACTION:

If the Board of Supervisors does not approve the transfer of ownership and related actions, the property will not be sold to Reliant, and BRIDGE will continue to seek another owner. The planned rehabilitation work will be further delayed.

CHILDREN'S IMPACT STATEMENT:

Woods Grove provides 80 units of housing affordable to families. This activity supports Goal 3 of the Children's Impact Statement: Families are Economically Self-Sufficient.