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CITY COUNCIL Washington Park Classics Project Third Amendment Agreement to OPLA. Jim Wong, Senior Project Manager October 15, 2012. Washington Park Classics Amendment. Background : 8-unit for-sale housing project was contracted w/ Trademark Development in Aug. 2005 and completed in May 2012

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city council washington park classics project third amendment agreement to opla

CITY COUNCILWashington Park Classics ProjectThird Amendment Agreement to OPLA

Jim Wong, Senior Project Manager

October 15, 2012

washington park classics amendment
Washington Park Classics Amendment

Background:

  • 8-unit for-sale housing project was contracted w/ Trademark Development in Aug. 2005 and completed in May 2012
  • Under existing OPLA, City’s $1.53M project loan would be repaid from recast loans to homebuyers ($524,245) and the balance would be forgiven ($1,005,624)
  • In late-July 2012, developer requested additional forgiveness on City loan based on project financial shortfall
washington park classics amendment1
Washington Park Classics Amendment

Background:

  • Additional City loan forgiveness of $368,645 necessary to avoid default and close project cost-revenue gap with $0 profit to developer
  • To meet construction lender’s release requirements and expedite closing of affordable unit #107, City will provide a $74,000 HOP loan to homebuyer
  • City will recover the $74,000 by placing a demand on sales proceeds of 4 units in escrow ($18,500 per unit)
washington park classics amendment2
Washington Park Classics Amendment

Existing OPLA Terms

  • $1,005,624 of City Loan to be forgiven
  • $524,245 of City Loan recast to homebuyers
  • Affordable units: 4 Moderate income

Amended OPLA Terms

  • $1,374,269 of City Loan to be forgiven
  • $155,600 of City Loan recast to homebuyers
  • Affordable units: 3 Low income 3 Moderate income
washington park classics amendment3
Washington Park Classics Amendment

Staff considered the following:

  • Project’s role in removing neighborhood blight
  • Additional state funding secured to increase number of affordable units and reach low income
  • Developer’s 7-year commitment to the project in the face of major challenges (storm drain, change in construction lender, declining real estate market, tight mortgage lending conditions)
washington park classics amendment4
Washington Park Classics Amendment

Approval of staff recommendation will:

  • Prevent project from potential default on construction loan
  • Preserve City’s affordable housing covenants
  • Assist successful close-out of project, bringing a positive impact to neighborhood
washington park classics amendment5
Washington Park Classics Amendment

Project Sales Status

  • Sold: 2 market rate units
  • Affordable unit #107 to close week of Oct. 15
  • Other 5 affordable units in escrow to close between Oct. 22 to Nov. 15