On May 1, 2008, the Board of Supervisors allocated $1,525,000 in CDBG funds to Resources for Community Development (RCD) for this project. On April 28, 2009, the Board of Supervisors allocated $1,350,000 in HOME funds. On June 23, 2009, the Board of Supervisors allocated $310,000 in HOPWA funds. On May 8, 2012, the Board of Supervisors allocated an additional $1,600,000 in HOME funds for a total of $1,950,000 in HOME funds. Through these actions, the Board has awarded a total of $4,775,000 to RCD and is retaining $10,000 for County costs.
RCD has formed a limited partnership, Berrellesa Palms L.P. to develop and own this project. The purpose of the Berrellesa Palms senior apartment project is to improve the supply of multi-family rental housing affordable to and occupied by lower income senior households in Central County through the construction of a 49 unit apartment building in Martinez.
Twenty-four of the units will be designated as County-assisted. Three units will be designated as HOPWA units. They will be affordable and available to households earning up to 20 percent of the area median income (AMI). Seven units will be affordable and available to households earning up to 35 percent AMI. Five units will be affordable and available to households earning up to 40 percent AMI. The remaining nine units will be affordable and available to households earning up to 50 percent AMI. HOME and CDBG funds will be provided to Berrellesa Palms L.P. in the form of a 55-year, residual receipt loan a three percent interest rate. Affordability and use restrictions will be incorporated into the County loan documents.
RCD used $1,448,640 in CDBG funds to acquire the site and $648,607 in HOME funds for predevelopment activities. The remaining CDBG funds will be used for relocation and demolition. The remaining HOME funds and the HOPWA funds will be used for development costs including permits and fees, soft costs, and construction costs.
Additional financing for the development includes County multifamily bonds, low income housing tax credits, State Multi-family Housing Program, Federal Home Loan Bank Affordable Housing Program, and Project Based Section 8 vouchers.
National Environmental Policy Act (NEPA): All HOME, CDBG, and HOPWA projects are subject to NEPA and 24 CFR Part 58 review. The NEPA review for this project has been completed. Required mitigations are included in the loan agreement.
Due to the high construction costs and limited revenue from the restricted rents, the total amount of the financing provided to the project will likely exceed the value of the completed project. Even though the proposed equity investment from low income housing tax credits is substantial compared to the amount of long term debt, the partnership agreement will have numerous safe guards of the investors equity. These safe guards essentially subordinate the County’s debt to the investor’s equity. Therefore, the County funds (federal grant funds) may not be fully secured through the value of the property.
County Counsel has approved to form the following attached documents:
• HOME, CDBG, and HOPWA Loan Agreement
• Promissory Note
• Deed of Trust with Assignment Of Rents, Security Agreement, And Fixture Filing
• Regulatory Agreement and Declaration Of Restrictive Covenants
Without the approval and execution of the HOME, CDBG, and HOPWA legal documents, the project will not be constructed. RCD must close on all financing in December or will lose the tax exempt bond allocation and the State funds.