Explanation
BACKGROUND: This legislation authorizes the Director of the Department of Development to execute modified loan documents between the City of Columbus, Department of Development and Spruce Bough Homes LLC to reduce the current interest rate on the loan from 5.5% to 0% since the low income housing tax credit rules are no longer applicable and execute a partial release of the mortgage to release the 796-810 E Fulton parcel. The loan agreement, promissory note, and mortgage will all need to be amended to reflect these changes. Spruce Bough Homes LLC is one of the ownership entities created for Community Properties of Ohio which is the managing member of this LLC.
On December 29, 2004, the City made a HOME loan of $1,000,000.00 to Spruce Bough Homes. The project consists of 112 units with multiple sites. A restrictive covenant was also executed for a five-year term on 68 of the units. Spruce Bough Homes would like to pursue a site swap for one of the parcels. The parcel is 796-810 E Fulton. It consists of 4 two-bedroom units and 4 three-bedroom units. The site to be swapped for is 381-395 Carpenter which is owned by Nationwide Children’s Hospital (NWC). That site consists of 9 two-bedroom units. 8 of the units will have project-based subsidy, 1 will be considered a market rate unit. NWC wants to purchase the Fulton St. site and has agreed to acquire and rehab the Carpenter St. site as a replacement for Fulton. Fulton is listed in our mortgage and covenant. They have met the City’s and HUD’s expectations for continuing the affordable housing and have requested that the Fulton site be released from the City loan so it can be sold to NWC.
The current interest rate on the loan is 5.5%. The low income housing tax credit rules requiring this interest rate are no longer applicable and the ownership team requests that the interest rate on the loan be reduced to 0% moving forward. This will require amending the Loan Agreement, Promissory Note and Mortgage as well as executing a partial release of the mortgage to release the 796-810 E Fulton parcel.
Fiscal Impact: None
Title
To authorize the Director of the Department of Development to execute modified loan documents for Spruce Bough Homes LLC, to reduce the interest rate on the loan to 0%, and amending the Loan Agreement, Promissory Note and Mortgage as well as executing a partial release of the mortgage to release the 796-810 E Fulton parcel. ($0.00)
Body
WHEREAS, the Department of Development, made a loan to Spruce Bough Homes LLC, an entity created for Community Properties of Ohio, on December 29,2004 for the purpose of funding a long-term commitment of affordability 112 units at multiple sites; and
WHEREAS, this loan was made with HOME Investment Partnership Program Funds received from the U. S. Department of Housing and Urban Development; and
WHEREAS, the compliance periods for the Low-Income Housing Tax Credit initial 15-year period and the 5-year HOME compliance period have been satisfied; and
WHEREAS, now that the Low-Income Housing Tax Credit initial 15-year compliance period has been satisfied, the project owners wish to have the City loan interest rate reduced to 0%; and
WHEREAS, Spruce Bough Homes LLC., wishes to pursue a site swap of 796-810 E Fulton to be swapped for 381-395 Carpenter which is currently owned by Nationwide Children’s Hospital; and
WHEREAS, in the usual daily operation of the Department of Development in that it is necessary to execute modified loan documents between the City of Columbus, Department of Development, and Spruce Bough Homes LLC to allow for a reduction of the interest rate to 0%, to amend the Loan Agreement, Promissory Note and Mortgage as well as execute a partial release of the mortgage to release the 796-810 E Fulton parcel; NOW, THEREFORE,
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
SECTION 1. That the Director of the Department of Development be and hereby is authorized to modify loan documents for Spruce Bough Homes LLC., to reduce the interest rate on the loan to 0%; to amend the Loan Agreement, Promissory Note and Mortgage as well as execute a partial release of the mortgage to release the 796-810 E Fulton parcel in order to allow for a site swap between them and Nationwide Children’s Hospital. The site swap is 796-810 E Fulton for 381-395 Carpenter.
SECTION 2. That all other aspects of the existing loan documents remain in full force.
SECTION 3. That this ordinance shall take effect and be in force from and after the earliest period allowed by law.