Elaine Null Court Apartments (Elaine Null) in Bay Point is one of three affordable housing developments included in the Carena Scattered Site project. Staff is recommending approval of the First Amendment to Development Loan Agreement (the “First Amendment”) between the County and Carena Associates, L.P. for two reasons. The first is that there was an error in the Development Loan Agreement (the “DLA”), specially in Section 2.5, Use of New County Loans, regarding the use of Community Development Block Grant and HOME Investment Partnerships Act loan proceeds on Elaine Null. The second reason is to grant the request of the developer to expand the allowable use of loan funds for maximum flexibility with other project funding sources.  
  
The First Amendment will allow the loan proceeds to be used for acquisition, construction costs, developer fee and soft costs associated with the refinancing and rehabilitation of Elaine Null.  
  
On October 17, 2017, the Board of Supervisors approved the following two Board orders:  
  
1. Item C.149 approving loan documents associated with $200,000 in HOME and $100,000 in CDBG funds for the purpose of paying off existing bank mortgages and rehabilitating Elaine Null; and  
  
2. Item C.159 approving an additional allocation of $61,900 of CDBG funds to be used for site acquisition of Elaine Null.   
  
In November 2017, the construction financing transaction closed with $161,900 of CDBG funds used for acquisition of Elaine Null. This use was not included in Section 2.5(b) of the DLA, but the associated Board order clearly identified acquisition as one of the intended uses. The error needs to be corrected.  
  
Carena Associates, L.P. requested to revise its DLA with the County to expand the allowable uses of the Elaine Null loan funds from “construction costs” (associated with the hards costs of construction to rehabilitate Elaine Null) to “acquisition, construction, developer fee, and soft costs” (associated with the design, permits, fees, financing costs and hard construction costs of the refinance and rehabilitation of Elaine Null) in order to have maximum flexibility with other funding sources. The rehabilitation of Elaine Null is nearly finished, which mitigates the risk of premature County investment, and the bulk of the construction costs were covered by multifamily housing revenue bond proceeds. The project will transition from construction to permanent financing stage in the next two months, and the funds will be expended within the HUD imposed deadline.

If not approved, the previous use of funds will be inconsistent with the terms of the loan, and the developer will be unable to use the remainder of loan funds necessary to complete the rehabilitation of Elaine Null.

The preservation of housing affordable to families supports one or more of the following children's outcomes:  
(1) Children Ready for and Succeeding in School;   
(2) Children and Youth Healthy and Preparing for Productive Adulthood;   
(3) Families that are Economically Self Sufficient;   
(4) Families that are Safe, Stable and Nurturing; and   
(5) Communities that are Safe and Provide a High Quality of Life for Children and Families.